2023 (5) TMI 1269 - AT - Service Tax

Refund claim - Service Tax paid on reverse charge basis for the GTA Services utilized by them during the period May 2013 to October 2013 - refund rejected on the ground that the products cleared by them are not in the category of food stuff and the refund claim is hit by unjust enrichment clause - HELD THAT - It is observed from the order passed by the lower Authorities that as submitted by the Learned Counsel they have not given proper consideration to the detailed certificate issued by the Chartered Accountant wherein he has clearly stated that (i) Cenvat Credit has not been taken by the Appellant (ii) The amount of refund claim filed, has been shown as amount receivable/dues from the Service Tax Department. When such an important document has been filed, the officials are required to give proper consideration for the same and give a clear finding as to why the same was not considered as proper evidence towards unjust enrichment clause . They have failed to do so. Coming to the argument of the Learned AR that the initial assessment was not disputed and the Appellant has not gone for re- assessment, in this case, this point will not arise. Here the Appellant is not service provider who has filed their self-assessment order under ST 3 Return. They are service recipients and are bound to pay the Service Tax on RCM basis. In the case of RCM, the recipient does not the assess the Service Tax component nor can he challenge the same by way of re-assessment. It is deemed fit to remand the matter to the Adjudicating Authority for the following limited purpose - (i) The Appellant will produce the original copy of the Chartered Accountant s Certificate dated 22/03/2014. They will also submit copies of their Balance Sheet from period 2010 to till the present financial year to substantiate their claim that this amount is still being shown as receivable/recoverable from the Service Tax Department. (ii) The Adjudicating Authority is directed of confine himself to examine these two aspects and pass a considered decision without rising any further issue on account of any other document. Appeal allowed by way of remand.

Summary

Issues involved:
The issue involved in this case is whether the Appellant is entitled to a refund claim for Service Tax paid on reverse charge basis for GTA Services utilized by them, and whether the refund claim is hit by the 'unjust enrichment clause'.

Issue 1: Eligibility for exemption under Notification No. 3/2013-ST dated 1/03/2013:
The Appellant, a manufacturer of biscuits, filed a refund claim for Service Tax paid on GTA services used for transportation. The Appellant was eligible for concession under Notification No. 3/2013-ST dated 1/03/2013, which granted exemption for payment of Service Tax on GTA services if used for transportation of food stuff. The Appellant paid the Service Tax without realizing the exemption, leading to a refund claim of Rs. 43,76,494. The Department raised concerns about the products not falling under the category of food stuff and the 'unjust enrichment clause'. The issue of exemption was dropped, but the refund claim was rejected by lower Authorities citing 'unjust enrichment'. The Appellant appealed to the Tribunal.

Issue 2: 'Unjust enrichment' clause and eligibility for Cenvat Credit:
The Appellant argued that the refund was related to outward freight charges and they were not eligible for Cenvat Credit for transportation expenses between their factory and buyer's premises. A Chartered Accountant's Certificate confirmed that the amount was not claimed as Cenvat Credit and was shown as receivable from the Service Tax Department, indicating no 'unjust enrichment'. The lower Authorities did not adequately consider the certificate, nor did they provide a reasoning in their orders. The Appellant contended that the appeal should be allowed based on this evidence.

Issue 3: Requirement for re-assessment and completion of process:
The Authorized Representative contended that the Appellant failed to prove that the claim was not hit by 'unjust enrichment'. Referring to case law, it was argued that the Appellant should have completed the process of re-assessment before filing the refund claim. The AR highlighted the necessity for re-assessment if dissatisfied with the initial assessment. The AR suggested that the refund claim should be rejected due to the lack of re-assessment by the Appellant.

Judgment:
The Tribunal observed that the lower Authorities did not adequately consider the Chartered Accountant's Certificate provided by the Appellant, which clearly stated the non-claim of Cenvat Credit and the amount being receivable from the Service Tax Department. The Tribunal noted that in cases of reverse charge mechanism, the recipient cannot challenge the Service Tax assessment through re-assessment. Therefore, the Tribunal remanded the matter to the Adjudicating Authority for further examination. The Authority was directed to focus on the Chartered Accountant's Certificate and the Appellant's Balance Sheets to determine the non-applicability of 'unjust enrichment'. The Authority was instructed to complete the proceedings within four months.