2015 (2) TMI 612 - AT - Service Tax

Denial of refund claim - Unjust enrichment - Export of services - Bar of limitation - Held that - Commissioner (Appeals) that the appellant would be unjustly enriched is not clear to me. - Clearly, the invoices show that the incidence of tax has not been passed on to the customers abroad. Once appellant have discharged the proof of not passing on the incidence of tax, the onus lies on the department to prove that duty incidence was passed. The invoices prove to be contrary and the department has not been able to establish that the duty incidence has been passed on to the customers abroad. In any case, it is a settled matter that the unjust enrichment does not arise in the case of export of services. On the issue of limitation, the Commissioner (Appeals) s reliance on Eaton Industries (2010 (12) TMI 71 - CESTAT, MUMBAI) is clearly misplaced. -The provisions of Central Excise Act including Section 11B have been made applicable to Service Tax under Section 83 of the Finance Act, 1994. Therefore, the provisions of Section 11B will apply. - amount for which refund has been claimed was paid in cash on 5.2.2011 and the refund application was filed on 28.7.2011. Therefore, the refund was filed on 28.7.2011. - refund allowed on merit as well as period of limitation - Decided in favour of assessee.

Summary

Issues:
1. Rejection of refund claim on grounds of unjust enrichment and limitation.

Analysis:
The appellant appealed against the Order-in-Appeal rejecting their refund claim due to unjust enrichment and limitation issues. The appellant, engaged in providing taxable "Market Research Agency (MRA)" services to foreign companies, paid Service Tax of Rs. 18,26,064/- by debiting CENVAT Credit, which was later reversed at the department's persuasion. The appellant then paid the same amount in cash and subsequently realized the service provided was an export, leading to a refund claim of Rs. 18,26,064/-. The Commissioner (Appeals) denied the refund citing unjust enrichment, as the appellant had re-credited the Service Tax amount in their CENVAT Account and the claim was time-barred based on the date of payment received for the service exported, following a Tribunal decision.

On the issue of unjust enrichment, the Commissioner's reasoning was challenged as the appellant had not passed on the tax incidence to foreign clients, thus not unjustly enriched. The judge noted that the CENVAT Credit wrongly utilized should be restored as the Service Tax was not required for export, leading to a refund entitlement. The burden of proof lay on the department to show tax incidence passed on, which was not established. It was clarified that unjust enrichment does not apply to export services, and the appellant was eligible for a refund.

Regarding the limitation issue, the Commissioner's reliance on a previous case was deemed misplaced. The relevant date for refund eligibility under Export of Service Rules was the payment date for the service exported. As the refund was sought for tax paid on an unnecessary export service, Section 11B of the Central Excise Act applied to Service Tax. The refund claim, filed within one year of the payment date, was deemed timely, not barred by limitation. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.