2021 (10) TMI 1393 - AT - Service Tax

Refund claim of service tax paid due to wrong calculation of value - rejection also on the ground that the appellant s payment of service tax is advance payment in terms of Rule 6(1A) of Service Tax Rules, 1994 which is required to be adjusted for the future payment - rejection also on the ground of unjust enrichment. HELD THAT - There is no charge in the show cause notice for denial of refund on this ground. Secondly, even if Rule 6(1A) is referred, it is found that appellant have clearly made the service tax payment in respect of an invoice of Bombardier Transportation Sweden. Therefore, it is an actual payment of service tax which falls under Rule 6(2) and does not fall under Rule 6(1A) as deposit. Therefore, on both the count the refund was wrongly rejected. Principles of Unjust enrichment - HELD THAT - On the perusal of the balance sheet, it is satisfied that the amount of refund is clearly shown under the head of Loan Advances. Therefore, the appellant has established that the incidence of amount of refund has not been passed on. On both the grounds the Commissioner (Appeals) has wrongly rejected the refund claim - the impugned order is set aside - Appeal allowed.

Summary

Issues:
Refund claim rejection based on advance payment under Rule 6(1A) of Service Tax Rules, 1994 and unjust enrichment.

Analysis:
The appellant paid excess service tax due to wrong calculation, seeking a refund of Rs 1,04,39,410. The adjudicating authority and Commissioner (Appeals) rejected the claim, citing the payment as an advance under Rule 6(1A) and unjust enrichment. The appellant argued that the SCN did not raise the advance payment issue. They contended the payment was actual, not advance, supported by a Chartered Accountant Certificate showing the amount as receivable in the balance sheet. The appellate tribunal found no mention of advance payment in the SCN, and the payment was for a specific invoice, falling under Rule 6(2) not 6(1A). The balance sheet submitted with the appeal demonstrated the refund amount under Loan & Advances, confirming no passing on of tax incidence.

Therefore, the tribunal held that the refund rejection was erroneous on both grounds. The impugned order was set aside, and the appeal allowed with consequential relief.