2015 (11) TMI 620 - AT - Service Tax

Denial of refund claim - unjust enrichment - Tour Operator Services - Held that - Appellant s argument regarding non-consideration of various facts by both the lower authorities will not carry the case any further, as rightly pointed out by the learned departmental representative that in the case of Hardesh Ores Pvt. Ltd. (2015 (9) TMI 993 - CESTAT MUMBAI), this bench has held once service tax liability is worked back and discharged, it would be that amount of tax is being recovered by the appellant and principles of unjust enrichment gets attracted (I was one of the member of the said bench). According I hold that question of unjust enrichment is not satisfactorily explained by the appellant and it has to be held that they have passed on the incidence of tax liability. - Decided against Assessee.

Summary

Issues involved: Refund claim of service tax paid by the appellant under Tour Operator Services category, retrospective amendment to exemption for tour operators, unjust enrichment principle application.

Refund Claim of Service Tax:
The appeal concerns the refund claim of service tax paid by the appellant under the Tour Operator Services category. Initially disputing the tax liability, the appellant later discharged the liability based on the amount received for services rendered. The appellant's Chartered Accountant argued that the retrospective amendment exempted tour operators from tax liability, supported by evidence that the amount was not recovered from clients. However, both lower authorities found tax liability had been collected, leading to the rejection of the refund claim.

Retrospective Amendment to Exemption:
The appellant contended that the retrospective amendment to the exemption for tour operators applied, relieving them of tax liability. The departmental representative referenced a previous bench order in the case of Hardesh Ores Pvt. Ltd., indicating that once service tax liability is discharged, the appellant is considered to have recovered the tax amount, invoking the principle of unjust enrichment. The bench, including the current member, held that the appellant failed to satisfactorily explain the unjust enrichment aspect, concluding that the tax liability had been passed on by the appellant. Consequently, the appellant's argument regarding the retrospective amendment was dismissed.

Principle of Unjust Enrichment:
The principle of unjust enrichment played a crucial role in the judgment. The appellant's failure to adequately address the issue led to the conclusion that they had passed on the tax liability, rendering the appeal devoid of merits and resulting in its rejection. The application of the unjust enrichment principle was pivotal in determining the outcome of the case, emphasizing the importance of demonstrating that the tax burden had not been shifted to others.

In summary, the appellate tribunal in Mumbai addressed the refund claim of service tax under the Tour Operator Services category, considering the retrospective amendment to the exemption for tour operators and applying the principle of unjust enrichment. Despite the appellant's arguments and evidence, the tribunal found that the tax liability had been passed on, leading to the rejection of the appeal. The judgment highlights the significance of justifying the non-passing of tax burden to avoid the application of the unjust enrichment principle.