2015 (2) TMI 141 - AT - Service Tax

Denial of refund claim - CENVAT Credit - refund was sought on the ground that service tax was remitted by assessee on the rendition of erection, commissioning and installation of transformers at different sites of PSEB; that this service was exempted from the liability to service tax under exemption Notification Nos. 11/2010-S.T., dated 27-2-2010 and 32/2010-S.T., dated 22-6-2010 - Held that - Revenue has preferred this appeal on the singular ground that since the work order between the assessee and the PSEB contained a covenant that the consideration payable by PSEB to the assessee was inclusive of taxes including excise duty, VAT, service tax and other taxes, the service tax burden must be deemed to have been passed on to the recipient namely PSEB. In the light of the settled precedent in the area including the order of the Ahmedabad Bench of this Tribunal in Modest Infrastructure 2012 (11) TMI 924 - GUJARAT HIGH COURT which is confirmed by the Gujarat High Court, the appeal filed by the Revenue is misconceived - Decided against Revenue.

Summary

Issues:
Refund claim for service tax remitted in cash and Cenvat credit for manufacturing transformers. Dispute over passing on the burden of service tax to the recipient. Interpretation of work order terms regarding taxes including excise duty, VAT, service tax, and other taxes.

Refund Claim for Service Tax and Cenvat Credit:
The appellant, a transformer manufacturer, filed a refund claim for service tax remitted in cash and Cenvat credit. The claim was based on the exemption of service tax under specific notifications related to the erection, commissioning, and installation of transformers for PSEB. Initially, the refund amount was &8377; 37,99,180/- but was reduced to &8377; 15,21,116/-. The primary authority rejected the refund citing that the rates specified in the work orders included service tax, and the appellant failed to provide details of service tax remitted against cash on the bills raised by PSEB.

Dispute Over Passing on the Burden of Service Tax:
The appellate authority allowed the appeal, emphasizing a previous Tribunal decision that if the total consideration between parties included taxes and no separate service tax was collected from the recipient, there was no passing on of the service tax burden. This decision was upheld by the Gujarat High Court, stating that there was no unjust enrichment. The Revenue appealed, arguing that the work order terms indicated the passing on of the service tax burden to PSEB. However, the Tribunal dismissed the appeal, citing the precedent set by the Ahmedabad Bench and confirmed by the Gujarat High Court, maintaining that the appeal was misconceived.

Interpretation of Work Order Terms:
The core issue revolved around the interpretation of the work order terms, which stated that the consideration payable by PSEB to the appellant included various taxes, including excise duty, VAT, service tax, and others. The Revenue contended that this indicated the passing on of the service tax burden to PSEB. However, based on previous decisions and the absence of a separate collection of service tax from PSEB, the Tribunal concluded that there was no unjust enrichment and dismissed the Revenue's appeal without costs. The judgment highlighted the importance of analyzing the specific terms of work orders and the implications on the passing on of tax burdens in refund claims.