2009 (3) TMI 116 - AT - Service Tax

Refund of service tax unjust enrichment chartered accountant s certificate - sponsorship service - admittedly the service tax amount was not separately shown in the invoices for domestic clients - However appellants also claimed that in some cases the service tax was refunded to their clients - The very fact that in some cases service tax was refunded to the customers shows that in all the cases the amount collected included the ailment of service tax. - Chartered Accountant came to the conclusion that in respect of domestic clients, the amount charge did not include service tax is not explained and does not appear to be logical - The burden of proving that the benefit of the service tax liability has not been passed on is on the appellants and under these circumstances the certificate of Chartered Accountant is not based on fats and from the documents claim of refund rejected.

Summary

Issues involved:
1. Rejection of refund claim for service tax on sponsorship service.
2. Rejection of refund claim for Cenvat credit on business exhibition service.

Analysis:
1. The appeal was filed against the rejection of the refund claim for service tax on sponsorship service. The appellant argued that they were not liable to pay service tax on sponsorship service. The refund claim was rejected on the ground of unjust enrichment, stating that the appellants had collected service tax from all clients unless proven otherwise. The Lower Authorities found that the appellants had collected service tax from domestic clients, as evidenced by the lack of separate service tax in invoices and the absence of proof that excess tax collected was returned to clients. The burden of proof that the service tax liability was not passed on rested on the appellants, and the certificate from the Chartered Accountant was deemed illogical and not based on facts. Consequently, the claim for refund on sponsorship service was rejected, upholding the Lower Authorities' decision.

2. The rejection of the refund claim for Cenvat credit on business exhibition service was based on the timing of credit taken beyond six months from the payment period. The appellant argued that the delay in taking credit was due to the finalization process and the absence of a time limit under Rule 4(7) of Cenvat Credit Rules for taking credit on input service. Unlike credit on inputs/capital goods, service tax credit can only be taken after payment for the service and service tax. The appellant contended that the delay was reasonable, given the obligations on the service receiver to ensure payment and tax compliance. The Tribunal considered the lack of clarity on the number of services and payments made, extending the benefit of doubt to the appellants. The matter was remanded to the Original Adjudicating Authority to reexamine the eligibility for refund from other perspectives, acknowledging the appellants' eligibility to take the credit.

In conclusion, the Tribunal upheld the rejection of the refund claim for service tax on sponsorship service but allowed a reexamination of the eligibility for refund on Cenvat credit for business exhibition service. The decision highlighted the importance of proving non-passing of service tax liability and the reasonable timing for claiming credit under the Cenvat Credit Rules.