2015 (1) TMI 726 - AT - Service Tax

Denial of refund claim - Unjust enrichment - procedural violation - Held that - Commissioner (Appeals) has come to the finding regarding admissibility of refund (other than relating to the unjust enrichment) by simply observing that procedural infringement is not sufficient to deny the substantive benefit without discussing whether the substantive benefit was otherwise actually available. The original adjudicating authority had not discussed that issue on merits. Therefore Revenue s contention that if at all, the issue should have been examined by the Commissioner (Appeals) on merit before coming to a finding about admissibility of refund or he should have remanded the matter to the original adjudicating authority to decide the claim on merit has sustainable force. As regards unjust enrichment, we find that Revenue has clearly and documentarily brought out as to how the impugned amount has been taken into account as expenses in their accounts which by necessary implication means that the burden has been passed on to the customers. In the wake of such documentary evidence to the contrary, the CA certificate is an inadequate counter. Thus the original adjudicating authority was right with regard the aspect of unjust enrichment. - Decided in favour of Revenue.

Summary

Issues:
Refund claim rejection based on unjust enrichment and procedural violations.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal allowing the refund claim, which was initially rejected due to unjust enrichment and procedural issues. The Commissioner (Appeals) held that procedural violations cannot be a reason to deny the refund and accepted the Chartered Accountant's certificate provided by the appellants as evidence against unjust enrichment.

The Revenue argued that the impugned amount had been passed on to customers as evidenced by the profit and loss account of the appellants. They contended that the Commissioner (Appeals) should have assessed the refund claim on merit, apart from unjust enrichment, rather than solely focusing on procedural violations. The appellants, in their cross-objections, emphasized that they did not pass on the burden, supported by the Chartered Accountant's certificate.

Upon reviewing the case and submissions, the Tribunal found merit in Revenue's argument that the Commissioner (Appeals) did not thoroughly examine the availability of the substantive benefit apart from procedural issues. The Tribunal noted that the original adjudicating authority did not discuss the issue on merits, and the Commissioner should have either assessed the claim on merit or remanded it for further examination. Regarding unjust enrichment, the Tribunal agreed with Revenue's documentary evidence showing the burden had been passed on to customers, making the CA certificate insufficient to counter it. Consequently, the Tribunal upheld the original adjudicating authority's decision on unjust enrichment.

In conclusion, the Tribunal allowed the Revenue's appeal, thereby rejecting the refund claim. The memorandum of cross-objections was disposed of accordingly.