2016 (3) TMI 622 - AT - Service Tax

Rejection of refund claim - Doctrine of Unjust enrichment - Vocational training - Impart of training courses in foreign languages to individuals and corporates - Claimed exemption under notification no. 24/2004-ST dated 10.09.2004 - the value of service remained the same in all the three periods namely before it paid service tax during the period when it paid service tax and after that when it stopped paying service tax. This fact certainly provides a lot of gravitas to the appellant s claim that the burden was not passed on to the customers. Also there is a certificate of Chartered Accountant certifying that the burden of tax was not passed on the service recipient. Further, the invoices did not show the component of service tax at all. All these factors put together constitute sufficient weight of evidence to infer that the appellant has been able to discharge of its onus to establish that it did not pass on the burden of Service tax (which is being claimed as refund) to the service recipient. Therefore, the refund is not hit by the doctrine of unjust enrichment. - Decided in favour of appellant with consequential relief

Summary

Issues:
Refund claim rejection based on unjust enrichment doctrine

Analysis:
The appeal was filed against the rejection of a refund claim amounting to Rs. 12,44,002 on the grounds that the burden of service tax was allegedly passed on to the service recipient, invoking the doctrine of unjust enrichment. The appellant, engaged in providing training courses in foreign languages, claimed exemption under a specific notification. The appellant argued that it did not pass on the tax burden to the service recipients, supported by various facts such as non-inclusion of service tax in invoices and consistent service pricing irrespective of tax payment periods. The Departmental Representative (DR) contended that the evidence presented was insufficient to prove non-passing of the tax burden.

Upon considering both sides' contentions, the Tribunal acknowledged that the pricing of services involves multiple factors, and the stability of service value during tax payment periods might not definitively prove non-passing of the tax burden. However, in this case, the service value remained constant across periods, and additional evidence, including a Chartered Accountant's certificate and absence of service tax in invoices, supported the appellant's claim. The Tribunal cited relevant judgments to support the inference drawn from the evidence presented. Consequently, the Tribunal held that the appellant successfully discharged the burden of proof to establish that the service tax burden was not transferred to the customers, thereby concluding that the refund claim was not affected by unjust enrichment. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief.