2019 (9) TMI 1409 - AT - Service Tax

Refund of Service Tax - reimbursement of travelling charges incurred by providing taxable service - rejection on the ground of time limitation and unjust enrichment - period from 2006-07 to 2008-09. Time Limitation - service tax was not paid by the appellant whereas as per the order of the adjudicating authority the appellant has paid the service tax along with interest and penalty - HELD THAT - The said demand was set aside by the Commissioner (Appeals) on 18.12.2013 and the refund claim was filed on 13.06.2014 by the appellant. These facts are not in dispute. Therefore holding a part of refund claim barred by limitation shows non application of mind as it is settled law that if the amount of duty/tax in dispute has been settled by the higher forum as not payable. Therefore the assessee is not required to file refund claim. The Commissioner (Appeals) has held that the appellant is not liable to pay service vide order dated 18.12.2013 - it is responsibility of the Revenue to grant refund claim to the appellant within three months from the date of the order whereas in this case the appellant has forced to file refund claim which was ultimately filed on 13.06.2014. Therefore the refund claim cannot be held barred by limitation. Unjust Enrichment - HELD THAT - The service tax in dispute was paid by the appellant along with interest and penalty during the pendency of their appeal before the Commissioner (Appeals). Therefore the question of passing of tax burden on the service recipient does not arise. Moreover with regard to the interest and penalty the question of passing on the service recipient does not arise as none of the assessee can recover the amount of interest and penalty form the service recipient in law - the adjudication order itself shows that the appellant has not passed on the tax burden on the service recipient for the reimbursement of travelling charges. Therefore the appellant is able to pass the bar of unjust enrichment. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection, unjust enrichment, limitation period for refund claim.

Refund Claim Rejection:
The appellant appealed against the rejection of the refund claim related to service tax demand for the period 2006-07 to 2008-09. The audit party observed that the appellant received reimbursement of travelling charges for taxable services but did not pay service tax on it. The demand was confirmed by the adjudicating authority but later dropped by the Commissioner (Appeals) on 18.12.2013. The appellant filed a refund claim on 13.06.2014, which was initially allowed but later rejected by the Commissioner (Appeals) citing unjust enrichment and limitation. The appellant argued that since the demand was set aside by the higher forum, they were not required to file a refund claim. The Commissioner (Appeals) failed to consider this and wrongly held the refund claim barred by limitation. The Tribunal upheld the appellant's argument and set aside the Commissioner's order, stating the refund claim was not time-barred.

Unjust Enrichment:
Regarding unjust enrichment, the Commissioner (Appeals) held that the appellant failed to provide evidence that they did not pass on the tax burden to buyers. However, the Tribunal noted that the appellant did not pay service tax on reimbursement of travelling charges during the disputed period and only did so during the appeal process. The appellant also paid interest and penalty, which cannot be passed on to buyers. The Tribunal found the Commissioner's observations on unjust enrichment contrary to law, as the appellant did not pass on the tax burden to buyers. The adjudication order confirmed that the appellant did not shift the tax burden to service recipients. Therefore, the Tribunal concluded that the appellant successfully rebutted the unjust enrichment allegation and set aside the Commissioner's decision.

Conclusion:
The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and upholding the adjudication order in favor of the appellant. The Tribunal found no merit in the Commissioner's decision on both the limitation period for the refund claim and the unjust enrichment issue.