2008 (5) TMI 68 - AT - Service Tax

Telephone Services, Online Information & Database Access & Retrieval Services, Leased Circuit Service etc. - refund claim filed on ground that they had paid tax on MRP of the Recharge Coupon Vouchers (RCVs) for their pre-paid services but the recharge vouchers had actually been sold to the distributors at a discounted price - respondent & their agent has received only the amount shown in the invoices & not received amount for the vouchers distributed free, hence, refund is allowed

Summary

Issues Involved:
1. Whether the refund claim, which was returned by the authorities and re-submitted by the respondent, is hit by limitation?
2. Whether the respondent is eligible for refund of the Service tax as a service provider?
3. Whether the respondent has adduced enough evidence to indicate that the refund claim as has been sought by them is fundamentally correct, and finally whether the doctrine of unjust enrichment is satisfied by the respondent?

Detailed Analysis:

Issue 1: Limitation on Refund Claim
The primary contention was whether the refund claim submitted on 23-9-2005 and returned on 21-12-2005, then resubmitted on 6-3-2006, was time-barred. The court referred to the judgment in the case of United Phosphorus Ltd. v. Union of India, which held that returning a refund application without making an order is contrary to the provisions of the Act and Rules. The original submission date should be considered for limitation purposes. The court concluded that the refund claim submitted on 6-3-2006 was in continuation of the application dated 23-9-2005 and thus, not time-barred.

Issue 2: Eligibility for Refund as a Service Provider
The respondent (RCL) provided services under "Telephone Services" and had appointed RCIL as an agent for marketing. The marketing agreement indicated that RCIL was not a principal to principal purchaser but an agent. The court held that RCIL, acting as an agent, issued invoices on behalf of RCL. Therefore, RCL was the actual service provider and eligible for a refund of the Service tax paid on the MRP of the RCVs, which were sold at a discounted price. The court remanded the matter to the adjudicating authority to correctly quantify the refund amount.

Issue 3: Evidence and Doctrine of Unjust Enrichment
The court examined whether sufficient evidence was provided to support the refund claim and whether the doctrine of unjust enrichment applied. The adjudicating authority did not record any adverse findings on unjust enrichment, implying acceptance of the respondent's position. The Revenue did not challenge this before the appellate authority. The Commissioner (Appeals) had considered the Chartered Accountant's certificate and invoices, concluding that the respondents were eligible for the refund as they had not passed on the tax burden. The court concurred with this finding, noting that RCIL, as an authorized agent, transmitted the received amounts to RCL, negating unjust enrichment.

Conclusion
The court upheld the order of the Commissioner (Appeals), finding it well-reasoned. The appeal by the Revenue was dismissed, and the matter was remanded to the adjudicating authority for the limited purpose of correctly quantifying the refund amount. The decision was pronounced in court on 15-5-2008.