2015 (5) TMI 341 - AT - Service Tax

Refund claim - Unjust enrichment - period of limitation - whether the activity of construction of residential flats which are ultimately sold to the buyers is a transaction of sale of goods or rendering the services - Held that - appellant has written the letter to CBEC on 7.6.2006 before the period of dispute for clarification whether they are liable to pay service tax on their activity or not and also clearly mentioned that department is pressurizing them to pay the service tax on their activity. I further find that letter to concerned Asstt . Commissioner on 7.6.2006 have clearly mentioned that appellant is depositing Service Tax under the pressure of department. As there is no prescribed form to raise protest for payment of service tax under the provisions of Finance Act, 1994, the letter written to Asstt . Commissioner placed before me by the appellant, clearly shows that service tax paid by the appellant is under protest. For deposits made under protest, the provision of section 11B of the Central Excise 1994 are not applicable. Appellant has written letters to the intended buyers of the flat that the dispute is going on between the appellant and CBEC about whether service tax is payable or not and in these letters it is clearly mentioned that the price agreed by the buyers is not inclusive of service tax and appellant is paying service tax from their own pocket if later on liability of service tax arises, the same will be paid by the intended buyers of the flat along with the agreed price of the flat. Further this fact has been certified by the Certificate issued by the Chartered Accountant and amount recoverable as service tax as reflected in their balance sheet . Therefore, I hold that appellant has discharged their burden of unjust enrichment. In these circumstances, the appellant is entitled to refund claim - Decided in favour of assessee.

Summary

Issues:
1. Refund claim rejection as time-barred and failure to pass unjust enrichment test.

Analysis:
1. Refund Claim Barred by Limitation:
The appellant, engaged in construction of residential flats, filed a refund claim for service tax paid under protest after a dispute with CBEC was settled in 2008. The authorities rejected the claim as time-barred and for unjust enrichment. The appellant argued that they sought clarification from CBEC in 2006, indicating they paid the tax under protest due to departmental pressure. As there was no prescribed form for such protest, the time limit under section 11B of the Central Excise Act, 1944 was deemed inapplicable. The tribunal agreed, holding that the refund claim was within time.

2. Unjust Enrichment Test:
The issue of unjust enrichment was also addressed. The appellant informed flat buyers about the ongoing dispute with CBEC regarding service tax liability and explicitly stated that the price agreed did not include service tax. They assured buyers that if the tax liability arose, it would be paid separately. This information was certified by a Chartered Accountant and reflected in the balance sheet. Consequently, the tribunal found that the appellant had met the burden of unjust enrichment. Therefore, the appellant was deemed entitled to the refund claim, and the impugned order was set aside, allowing the appeal with any consequential relief.

In conclusion, the tribunal ruled in favor of the appellant, holding that the refund claim was not time-barred and that the appellant had satisfied the unjust enrichment requirement, thereby granting the appeal and providing relief accordingly.