2015 (11) TMI 1255 - AT - Service Tax

Denial of refund claim - Bar of limitation - Unjust enrichment - Held that - Impugned order however rejects refund on the ground that the assessee failed to disclose the amount of refund claimed by it in its financial records, in its books of accounts and failed to furnish original financial records to verify its claim and therefore appellant failed to establish that the liability of the excess amount pre-deposited was not passed on and therefore there was no unjust enrichment. This is wholly fallacious reason. Both the authorities concede the position that appellant pre-deposited ₹ 21,38,874/- against its assessed service tax liability of ₹ 15,69,823/- apart from the interest thereon. In the circumstances, the excess amount deposited by the appellant, if refundable under law would be the amount receivable by it, particularly as the appellate authority found in favour of the assessee on the point of limitation. - Decided in favour of assessee.

Summary

Issues:
1. Refund of excess service tax deposited.
2. Bar of limitation for filing refund claim.
3. Unjust enrichment and passing on the burden of service tax.

Analysis:

Issue 1: Refund of excess service tax deposited
The appellant filed an appeal against the order rejecting the refund claim of excess service tax deposited, amounting to Rs. 2,86,443/-. The appellant had made a pre-deposit of Rs. 21,38,874/- prior to the initiation of proceedings. The lower appellate authority found in favor of the appellant on the point of limitation, stating that the refund claim was filed within the prescribed period. The excess amount deposited by the appellant, if refundable under the law, would be the amount receivable by the appellant. The impugned order computed the quantum of refund at Rs. 2,57,625/- after considering the interest payable on the confirmed service tax demand.

Issue 2: Bar of limitation for filing refund claim
The Assistant Commissioner rejected the refund claim on the grounds of limitation and unjust enrichment. However, the lower appellate authority found that the refund claim was filed within the limitation period. The appellant had pre-deposited an amount exceeding the assessed service tax liability, which should be refundable to the appellant. The impugned order's reasoning that the appellant failed to disclose the refund claim amount in its financial records was considered fallacious, as the excess amount deposited by the appellant was acknowledged by both authorities.

Issue 3: Unjust enrichment and passing on the burden of service tax
The lower appellate authority rejected the refund claim on the grounds that the appellant failed to establish that there was no unjust enrichment and that the burden of service tax was not passed on. However, it was established that the appellant had pre-deposited an amount higher than the assessed service tax liability. Therefore, the excess amount deposited should be refundable to the appellant as it was not passed on. The appeal was allowed, and the appellant was entitled to a refund of Rs. 2,57,675/- along with any applicable interest as per the law.