2014 (9) TMI 537 - AT - Service Tax

Refund claim on realization that service tax was paid wrongly - The appellant had mistakenly paid service tax of ₹ 2,02,883/- on installation of raised pavement markers (road studs) for a National Highway during the material period. - unjust enrichment - Held that - The appellant however, chose not to show the service tax amount in any of the invoices. Therefore, under Section 12B, the appellant will be deemed to have passed on the full incidence of tax to the service recipient inasmuch as the contrary has not been proved by the appellant. There is nothing in the work order to show that the service recipient was not liable to pay service tax to the appellant, nor can the appellant evade a statutory liability on the strength of anything contained in the work order (contract). It is trite law that private parties cannot contract to evade or sidestep statutory obligations. The appellant was obliged under Section 12A to show service tax also in the relevant invoices but they did not choose to do so. - refund denied - Decided against the assessee.

Summary

Issues:
Refund claim rejection by Commissioner on grounds of unjust enrichment.

Analysis:
The appellant mistakenly paid service tax on installation of road studs for a National Highway under "Commercial or Industrial Construction service" defined under Section 65(105)(25b) of the Finance Act, 1994. The refund claim was filed after realizing the mistake. The original authority sanctioned the refund, stating that the tax was not collected from customers. However, the Commissioner issued a show cause notice proposing to reject the refund claim on grounds of unjust enrichment. The Commissioner ultimately rejected the claim, leading to this appeal.

The appellant argued that the tax burden was not passed on to the customer as per the contract terms and invoices. The Superintendent argued that the appellant treated the invoice value as cum-tax value, implying that the tax burden was passed on to the customer. The Tribunal found that granting the refund would result in unjust enrichment for the appellant, as evidenced by the calculation of refundable tax provided in the Assistant Commissioner's order.

The Tribunal referred to Sections 12A and 12B of the Central Excise Act, which mandate indicating the service tax amount in invoices. Since the appellant did not show the service tax amount in the invoices, they would be deemed to have passed on the full tax incidence to the service recipient. The Tribunal emphasized that private parties cannot evade statutory obligations through contracts. As the appellant failed to demonstrate otherwise, the impugned order rejecting the refund claim was upheld, and the appeal was dismissed.

In conclusion, the Tribunal found that the refund claim was rightly rejected on the grounds of unjust enrichment and failure to comply with statutory obligations regarding the disclosure of service tax in invoices. The judgment highlights the importance of adhering to tax regulations and preventing unjust enrichment in refund claims.