2015 (8) TMI 64 - AT - Service Tax

Denial of refund claim - refund claim was filed consequent to dropping of show cause notice - doctrine of unjust-enrichment - amount was not shown in the current Assets or Loans/ Advances or receivable in the balance sheets but were shown as expenditure in the books of account - Held that - that is not a ground for rejecting refund claim - Decision in the case of Ranade and Co vs. Commissioner of Service Tax Ahmedabad (2012 (6) TMI 190 - CESTAT AHMEDABAD) followed - there is no evidence brought on record that the service tax paid has been shown on the invoices as collected from the service recipients - Decided in favour of assessee.

Summary

Issues:
Applicability of doctrine of unjust enrichment to service tax paid by the appellant after proceedings initiated but not shown in financial statements as receivable.

Analysis:
The appeal was filed concerning an order passed by the Commissioner (Appeals), Ahmedabad, on the issue of whether the doctrine of unjust enrichment applies to service tax paid by the appellant after proceedings commenced but not reflected as receivable in financial statements. The appellant contended that since the service tax was not collected from customers, unjust enrichment should not apply. The appellant cited relevant case laws to support their argument. The Revenue, represented by Sh. S.K. Shukla, defended the order and referred to the case law of Keihin Fie Pvt Limited vs. CCE Pune-I. After hearing both parties and examining the case records, the Tribunal considered whether the refund of service tax paid after proceedings initiation falls under Section 11B of the Central Excise Act, 1944. The Revenue argued that the amounts paid were not shown as assets or receivables in the balance sheet but as expenditure, while the appellant maintained that the tax was not recovered from customers despite not being reflected as receivable. The Tribunal distinguished the case laws cited by the parties, noting that the issue at hand involved payment of service tax post-proceedings initiation, making the Revenue's case laws inapplicable.

In a detailed analysis of a similar case, the Tribunal highlighted that the appellant had not collected service tax from customers for taxable services and had shown the tax separately on invoices only when applicable. The Tribunal found that the appellant's practice demonstrated no unjust enrichment as the tax amount was not recovered from customers. Despite the tax being shown as expenditure in the balance sheet, the Tribunal ruled in favor of the appellant's refund claim, emphasizing that the tax was not collected from customers and the amount was not shown as receivable. Citing the decision in Sunbeam Auto Ltd., the Tribunal held that keeping the amount in sales expenses did not warrant denial of the refund claim. Applying the same rationale to the present case, where there was no evidence of tax collection from service recipients, the Tribunal concluded that the appeal should be allowed, as per established legal principles.

Ultimately, the Tribunal allowed the appeal filed by the appellant, granting consequential relief. The decision was pronounced in court on 1.5.2015, affirming the appellant's eligibility for the refund claimed, based on the absence of evidence of tax collection from customers and in line with established legal precedents.