2016 (5) TMI 132 - AT - Service Tax

Rejection of refund claim - Amount paid prior to show cause notice - Maintenance and Repair service and other service - Refund claim rejected on the ground that appellants have not proved that the burden of duty has not been passed on to other person and Commissioner (Appeals) ordered the amount to be credited to be Consumer Welfare fund - Held that - because the appellants showed the amount of 89, 1507- as expenditure in the books of account they have passed on the burden to their customers and therefore the refund claim is hit by unjust enrichment. Though the appellants produced the Certificate of Chartered Accountant it is seen that Commissioner (Appeals) has not considered the Certificate of Chartered Accountant furnished by the appellant which states that the incidence of tax has not been passed on to other. It is for the department to show by adducing some material that the incidence of tax has been passed on. As during the relevant period the said services were not taxable the issue held in the appellant s favour. Merely because the amount was shown as expenditure it cannot be concluded that the burden of tax has been passed on to other indirectly. The burden rests upon the department to prove that this amount had been recovered by appellant from buyer as increased price.Therefore by following the ratio of various judgments the claim of refund is not hit by the bar of unjust enrichment and the order directing to credit the sanctioned refund to Consumer Welfare Fund is therefore not sustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
Refund claim hit by unjust enrichment - Burden of proof on appellant - Consideration of Chartered Accountant Certificate - Compliance with Section 11B of Central Excise Act, 1944.

Analysis:
The appellant challenged the Order passed by Commissioner (Appeals) directing the sanctioned refund to be credited to the Consumer Welfare Fund, alleging unjust enrichment. The appellant, registered under the category of "Maintenance and Repair service," faced a show cause notice for non-payment of service tax. The original authority confirmed the demand, but the Commissioner (Appeals) set aside the entire demand, allowing the appeal. The appellant then sought a refund of the amount paid initially, supported by a Chartered Accountant Certificate. The refund claim was rejected on the grounds of unjust enrichment, stating the burden of duty was passed on to others. The appellant contended that the amount was not passed on, as it was paid under pressure and not towards any quantified demand of service tax.

The appellant argued that during the relevant period, the services were not taxable, and the amount paid was not indicative of passing on the burden of tax. The Commissioner (Appeals) held that showing the amount as expenditure implied passing on the burden, disregarding the Chartered Accountant Certificate provided by the appellant. The appellant relied on judgments highlighting that merely showing an amount as expenditure does not prove passing on the burden of tax. The burden of proof lies with the department to demonstrate that the amount was recovered from the buyer as an increased price.

The Tribunal analyzed previous judgments where it was established that showing an amount as expenditure does not automatically indicate passing on the burden of tax. Following this precedent, the Tribunal held that the refund claim was not hit by unjust enrichment. Consequently, the impugned order directing the refund to be credited to the Consumer Welfare Fund was set aside, and the amount was directed to be refunded to the appellant. The appeal was allowed with consequential reliefs, if any, in favor of the appellant.