2015 (5) TMI 454 - AT - Service Tax

Construction of residential complex - works contract services - Denial of refund claim - Unjust enrichment - Held that - If the activity of the assessee is outside the purview of the taxable service qua the definition of the taxable service whether the sub-contractors had provided any taxable service and if so had remitted service tax, is a wholly irrelevant issue in the adjudication process. On whether assessee provided a taxable service, Government clarification dated 24.05.2010 is conclusive and the answer is that the appellant had not provided a taxable service. If that be so, the assessee is entitled to refund subject to fulfilment of the statutory requirement under Section 11B read with Section 12A and 12B of the Central Excise Act, 1944. On a conjoint reading of these provisions, the legislative trajectory is clear, that a claimant for refund of tax is required to establish that the burden of service tax (an indirect tax) was not passed on. If there is a passing of the burden, the doctrine of unjust enrichment kicks in and a refund claim would not be admissible nor can Revenue retain such amount. Even if there be unjust enrichment, the un- authorised tax remitted by an assessee or collected by the Government cannot be retained but must be credited to the Consumer Welfare Fund. Despite a series of correspondence between the assessee and Revenue officers, there is no material which has come on record to infer that the burden of service tax was not passed on by the appellant and the doctrine of unjust enrichment is therefore excluded - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Refund claim of service tax and interest by the assessee.
2. Rejection of refund claim by primary adjudication order.
3. Appeal against the rejection of refund claim.
4. Applicability of unjust enrichment principle.
5. Interpretation of relevant provisions of the Central Excise Act, 1944 and Finance Act, 1994.

Issue 1: Refund claim of service tax and interest by the assessee

The appellant, a registrant under the Finance Act, 1994, sought a refund of service tax and interest amounting to Rs. 30,06,796, which it had remitted under the assumption of service tax liability. The appellant's activities were clarified by the Ministry of Finance as not falling under taxable services, leading to the refund claim.

Issue 2: Rejection of refund claim by primary adjudication order

The primary adjudication order rejected the refund claim on grounds of limitation specified in Section 11B of the Central Excise Act, 1944, and also on the basis of unjust enrichment, stating that the burden of service tax was passed on by the appellant. The order raised issues regarding the submission of proof and time limitations for the refund claim.

Issue 3: Appeal against the rejection of refund claim

The appellant appealed the primary order, and the appellate Commissioner partially allowed the appeal. The appellate Commissioner ruled that a portion of the refund claim was not barred by limitation and directed the primary authority to verify documents to ensure the burden of service tax was not passed on, citing relevant case law to support the decision.

Issue 4: Applicability of unjust enrichment principle

The judgment emphasized the principle of unjust enrichment concerning refund claims, stating that if the burden of service tax was passed on, the claim would not be admissible. The judgment highlighted the requirement for the appellant to establish that the burden was not passed on to be eligible for a refund.

Issue 5: Interpretation of relevant provisions of the Central Excise Act, 1944 and Finance Act, 1994

The judgment analyzed Sections 11B, 12A, and 12B of the Central Excise Act, 1944, along with Section 83 of the Finance Act, 1994, to establish the legislative requirements for refund claims of service tax. It outlined the need for probative material to prove that the burden of indirect tax was not passed on, as per the statutory provisions.

In conclusion, the judgment set aside the impugned order and remitted the matter to the primary authority for further examination. The appellant was granted the opportunity to provide evidence within a stipulated time frame to demonstrate that the burden of service tax was not passed on, failing which the refund amount would be credited to the Consumer Welfare Fund. The judgment highlighted the importance of complying with statutory requirements and providing substantiating evidence to support refund claims in cases involving service tax liabilities.