2017 (3) TMI 1101 - AT - Service Tax

Refund claim - time bar - unjust enrichment - Held that - u/s 11B of Central Excise Act, 1944, the amount claimed is required to be credited to the Fund unless the applicant is able to evidence that the incidence had not been passed on - The mere fact that the service tax amount have not been in the clients ledger account, and that the service tax amount paid has been accounted as an expenses in profit and loss account cannot override the factual position that whatever billing has been made is inclusive of service tax which is not shown separately. So there is no alternative but to infer that the service tax amount has been recovered from their clients and embedded in the billing amount - refund claim allowed on account of unjust enrichment - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund claim rejection based on misinterpretation of circular and unjust enrichment.
2. Claim rejection due to misinterpretation of circular, unjust enrichment, and time limitation.
3. Disagreement on rejection based on time limitation and unjust enrichment.
4. Applicability of circular and unjust enrichment in refund claims.

Analysis:
Issue 1:
The case involved M/S Quick Builders Pvt. Ltd, which filed a refund claim following a clarification on tax transactions. The original authority rejected the claim citing misinterpretation of the circular, invoking the doctrine of 'unjust enrichment,' and time limitation under section 11B of the Central Excise Act, 1944. However, the Commissioner of Central Excise (Appeals) allowed the refund, except for the amount barred by time limitation.

Issue 2:
Similarly, M/S Shree Saibaba Constructions Pvt Ltd faced claim rejection based on circular misinterpretation, unjust enrichment, and time limitation. The original authority rejected the claim, but the Commissioner of Central Excise (Appeals) allowed the refund, except for the amount barred by time limitation.

Issue 3:
The first appellate authority disagreed with the rejection based on time limitation and unjust enrichment, allowing refunds for both entities. The authority considered the entities as distinct from contractors based on the clarification and circulars, and found no evidence of unjust enrichment based on documentary evidence provided.

Issue 4:
The appeals were consolidated for disposal, with the focus on the applicability of the circular and unjust enrichment in refund claims. The decision highlighted the binding nature of the circular on the department and emphasized the need for claimants to demonstrate the non-passing of tax incidence to be eligible for a refund. The rejection based on 'time bar' and 'unjust enrichment' was upheld, emphasizing the presumption of tax collection without legal authority if not returned.

The judgment dismissed the appeals, emphasizing the importance of adhering to the circular, demonstrating non-passing of tax incidence, and the hierarchy of actions in refund claim processing. The decision underscored the need for claimants to absorb the tax burden to be eligible for a refund, failing which the amount should be credited to the Fund. The rejection based on 'time bar' and 'unjust enrichment' was upheld, reinforcing the legal obligations in tax refund claims.