2009 (1) TMI 66 - AT - Service Tax

Courier services - Refund claim filed by PIC (Professional International Courier) on realizing that they were not required to discharge service tax being co-loaders - tax collected was returned to customer by way of credit notes - it is evident that appellant only had borne the burden of Service Tax - when the service provider has returned the service tax collected there cannot be any question of unjust enrichment - principle of unjust enrichment not applicable refund entitled with interest

Summary

Issues:
1. Whether the appellants are entitled to a refund of service tax paid erroneously?
2. Application of the principle of unjust enrichment in the case.

Analysis:
1. The appellants provided courier services and paid service tax during a specific period. Later, they discovered they were not liable to pay the tax as co-loaders of another company. The original authority rejected their refund claim based on the principle of unjust enrichment, following a previous Tribunal decision. The Commissioner (Appeals) upheld this decision.

2. The appellants argued that the previous Tribunal decision cited was not applicable to service tax refunds and referred to a different case where a refund was allowed in similar circumstances. The Tribunal noted that the appellants had returned the tax collected to their customers, thereby not benefiting from it, and were entitled to the refund. The Tribunal allowed the appeal based on this reasoning, stating that the appellants had borne the burden of the tax and were rightfully entitled to the refund.

In conclusion, the Tribunal allowed the appeal, granting the appellants a refund of the erroneously paid service tax amount along with applicable interest. The decision was based on the principle that when the tax collected is returned to the recipient, there is no unjust enrichment, entitling the service provider to a refund.