2015 (8) TMI 68 - AT - Service Tax

Denial of refund claim - Unjust enrichment - Renting of immovable property and sale of space for advertisement - Held that - Jurisdictional High Court that the facts were identical to the facts of the present case where service tax element was shown in the invoices but the same was not paid by the service recipient. In the present case Chartered Accountant s certificate dated 05.3.2014 certifies that service recipient M/s. Reliance Industries Limited has not paid any service tax to the appellant on account services of lease of vacant land for merchandising of on-fuel products and lease of vacant land for erection and display of hoarding. Service recipient M/s. Reliance Industries Limited vide letter dated 06.10.2011 has also confirmed that they had neither paid tax on these services to the appellant nor taken any credit of the service tax paid by the appellant. Appellant has therefore discharged its onus that excess service tax paid has not been recovered from the customers. There is no evidence on record produced by the Revenue showing any further verification on the part of the Revenue to the effect that the claim of the appellant of not passing on the service tax is not genuine and that the excess service tax paid is actually paid by the service recipient. - Decision in the case of CCE & ST vs. Modest Infrastructure Limited 2012 (11) TMI 924 - GUJARAT HIGH COURT followed - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on unjust enrichment principle.

Analysis:
The appellant filed a refund claim for service tax paid on renting immovable property and sale of advertisement space, contending that the service tax was not leviable as the recipient did not pay any service tax. The appellant provided a certificate from the recipient stating no service tax was paid and a Chartered Accountant's certificate confirming no payment received. The first appellate authority rejected the claim citing unjust enrichment due to passing on the tax liability. The appellant relied on a similar case where the High Court ruled in favor of the assessee, emphasizing that if service tax mentioned in invoices is not received from the recipient, unjust enrichment does not apply.

The Revenue argued that unjust enrichment applies once the service tax is received from the recipient. The case records revealed that the appellant had not recovered the service tax from the recipient, supported by certificates and documents. The first appellate authority upheld the rejection based on the assumption that the tax liability was passed on. However, the appellant demonstrated through evidence that the excess service tax was not collected from customers. The High Court precedent highlighted that if the tax was not received from customers, there was no unjust enrichment, leading to the allowance of the appeal with consequential relief.

The judgment emphasized the importance of actual receipt of service tax from customers to invoke the unjust enrichment principle. The appellant successfully proved that the tax amount mentioned in invoices was not recovered from the recipient, aligning with the legal precedent set by the High Court. The decision to allow the appeal was based on the lack of evidence from the Revenue to dispute the appellant's claim of non-recovery of service tax, ultimately leading to the grant of relief to the appellant.