2017 (1) TMI 549 - AT - Service Tax

Refund claim - reduction in transportation charges - reverse charge mechanism - unjust enrichment - Time limitation - section 11 B of the Central Excise Act, 1944 - denial on the ground that the appellant, being the service recipient, has no locus standi to claim a refund as it has not paid service tax in the Government Account - Held that - The applicability of Section 11B ibid for claiming refund of Central Excise duty/Service Tax is not restricted only to manufacturer/service provider. The said statutory provision mandate that any person can claim refund, subject to the conditions that the tax/duty was collected from or paid by him; and the incidence of such tax/duty had not been passed on by him to any other person. Jurisdiction to file claim - Held that - There is no provision exist in Section 11B ibid, limiting the filing of refund claim either in Commissionerate having jurisdiction over service provider or that having jurisdiction over service recipient - the appellant in the capacity of recipient of service, can file refund application before the authorities having jurisdiction over the service recipient or before the jurisdictional authorities of the service provider under Section 11B ibid. The excess paid service tax has been borne by the appellant and its incidence has not been passed on to any other person. Therefore, the legal presumption contained in Section 11B ibid has been rebutted in this case and the appellants refund claim is not hit by the doctrine of unjust enrichment. Appeal allowed - decided in favor of assessee.

Issues:
1. Entitlement of a service recipient to claim a refund of service tax.
2. Jurisdiction for filing a refund application.
3. Time limitation for filing a refund claim.
4. Doctrine of unjust enrichment.

Analysis:

Issue 1: Entitlement of a service recipient to claim a refund of service tax
The judgment clarified that Section 11B allows any person to claim a refund if the tax was collected from or paid by them, and the tax incidence was not passed on. The appellant, as a service recipient, was entitled to claim a refund of service tax paid to the service provider. The judgment cited the Hon'ble Allahabad High Court's ruling in a similar case, affirming the right of a service recipient to claim a refund.

Issue 2: Jurisdiction for filing a refund application
The judgment highlighted that Section 11B does not restrict the filing of refund claims to a specific jurisdiction. The appellant had the choice to file the refund application before the authorities having jurisdiction over the service recipient or the service provider. The Tribunal emphasized that the appellant's choice of jurisdiction for filing the refund claim was legitimate, citing relevant case law.

Issue 3: Time limitation for filing a refund claim
The judgment addressed the time limitation aspect raised by the authorities for rejecting the refund application. It was determined that the date of issuance of credit notes by the service provider should be considered as the relevant date for computing the limitation period. As the refund application was filed within the stipulated time from this date, it was held to be within the prescribed time limit under Section 11B.

Issue 4: Doctrine of unjust enrichment
The judgment examined the doctrine of unjust enrichment and found that the appellant had satisfactorily demonstrated that the service tax incidence was not passed on to any other person. The appellant's balance sheet and the certificate from a Chartered Accountant supported the claim that the appellant bore the service tax burden. This evidence rebutted the legal presumption of unjust enrichment, validating the appellant's refund claim.

In conclusion, the judgment disposed of the appeals, affirming the appellant's eligibility for a refund of service tax based on legal grounds. The jurisdictional Assistant Commissioner of Service Tax was directed to verify the documents and process the refund claim accordingly.

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