2019 (9) TMI 1395 - AT - Service Tax

Refund of Service tax - rejection on the ground of unjust enrichment - Works Contract - construction services to various Departments of U.P. Government - Section 102(2) of FA - N/N. 6/2015-ST dated 01/03/2015 effective from 01/04/2015 - HELD THAT - The provisions of Rule 102 were specifically introduced in the Finance Act for refund of the service tax so paid, which was actually paid on account of inadvertant withdrawing of exemption. The contracts with the U.P. Government were inclusive of all taxes, thus, not attracting the provisions of unjust enrichment. There are no infirmity in the impugned order - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Refund of service tax paid due to inadvertent withdrawal of exemption, unjust enrichment, interpretation of relevant notifications and provisions.

Analysis:

Issue 1: Refund of service tax paid due to inadvertent withdrawal of exemption
The case involved the respondents, who provided construction services to various departments of the U.P. Government and paid service tax under the works contract category. The exemption for services provided to the government was initially omitted but later restored through a notification. In the Financial Year 2015-16, Section 102(2) allowed for the refund of the service tax paid during that period. The respondents filed for a refund, which was rejected initially on the grounds of unjust enrichment. However, the Commissioner (Appeals) later set aside the rejection and allowed the appeals for refund.

Issue 2: Unjust Enrichment
The Revenue filed appeals against the decision of the Commissioner (Appeals), contending that the refunds were barred by the principle of unjust enrichment. The tribunal noted that Rule 102 was introduced in the Finance Act specifically for the refund of service tax paid due to the inadvertent withdrawal of exemption. The contracts with the U.P. Government included all taxes, indicating that the service tax was not passed on to the customers. Therefore, the tribunal found no merit in the Revenue's argument of unjust enrichment and rejected the appeals, along with disposing of the cross-application.

Issue 3: Interpretation of Notifications and Provisions
The tribunal's decision was based on a thorough interpretation of the relevant notifications, provisions, and the intention behind the introduction of Rule 102 for refund purposes. By analyzing the specific circumstances of the case, including the restoration of exemption and the nature of the contracts with the U.P. Government, the tribunal concluded that the service tax paid was eligible for a refund as it was not subject to unjust enrichment. The tribunal's ruling highlighted the importance of understanding the legal framework and the specific context of each case when interpreting tax laws and seeking refunds.

In conclusion, the Appellate Tribunal CESTAT ALLAHABAD, through a common order by Hon'ble Smt. Archana Wadhwa and Hon'ble Mr. Anil G. Shakkwar, upheld the decision to allow the refund of service tax paid by the respondents due to the inadvertent withdrawal of exemption. The tribunal dismissed the Revenue's appeals on the grounds of unjust enrichment, emphasizing the specific provisions and circumstances that justified the refund in this case.