2018 (3) TMI 1679 - AT - Service Tax

Refund claim - unjust enrichment - case of Revenue is that the issue of taxability is yet to be decided and refund at thus stage may not be appropriate - Held that - The benefit of a decision in favour of another entity could not be appropriated by the respondent for claiming refund, the impugned order has rendered a clear finding as to the nature of the payment made by the respondent and the circumstances in which it was. What is sauce for the goose must also be sauce for the gander. It would, therefore, appear that the tax was paid by the respondent on the basis of a judicial decision and, therefore, precluded from seeking judicial remedy against such voluntary payment. The restraint on conferment of benefit of victory attained by another would not apply in the present instance owing to the peculiar circumstances. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against setting aside of rejection and directing sanction of refund claim. Dispute over taxability yet to be settled. Claim for refund based on taxability decision in another entity's appeal. Appeal challenging first appellate authority's decision. Issue of interest claimed by respondent.

Analysis:
1. The appeal by Revenue challenges the setting aside of rejection and direction to sanction a refund claim of ?8,58,658 by M/s Kalyani Enterprises. The dispute arises from the taxability issue, which is pending before the Hon'ble High Court of Calcutta. The claim for refund originated from a matter decided in another entity's appeal, leading to a complex legal situation.

2. The claimant, a commission agent, paid the tax liability of ?8,58,658 following a Tribunal decision confirming the taxability of services availed by the manufacturer. The claim for refund was rejected by the original authority but set aside by the first appellate authority, leading to the current appeal. The issue revolves around the eligibility for refund subject to the test of unjust enrichment.

3. The Tribunal emphasizes that the decision to allow the refund is not premature, despite the pending appeal on taxability. The provisions for refund under the Central Excise Act do not permit rejection based on such grounds. The Tribunal also notes that the tax demand on the respondent was initiated based on a judicial decision, and the respondent is not precluded from seeking a refund under these circumstances.

4. The Tribunal dismisses the appeal by Revenue, finding no merit in challenging the refund claim. It upholds the first appellate authority's decision and emphasizes that interest shall be applicable once the refund is sanctioned. The Tribunal provides a detailed analysis of the legal principles and precedents governing the case, ultimately ruling in favor of the respondent.

5. The cross-objections raised by the respondent regarding interest are also disposed of by the Tribunal, ensuring that the provisions of law will apply once the refund is granted by the competent authority. The judgment provides a comprehensive resolution to the complex legal issues involved in the case, balancing the interests of both parties within the framework of the law.