2017 (7) TMI 298 - AT - Service Tax

Refund claim - service tax paid on warehousing services - unjust enrichment - Held that - It is obvious that at the material time, for the period of 5 years duty was not paid under protest and the same was being charged against expenditure means that the Service Tax amount was recovered from their customer. It is further seen that the C.A. certificate does not hold that the said amount has not been charged to expenditure. Moreover the reasons for holding that the amount has not been recovered from others is blind statement without any reasoning or arguments - appeal dismissed - decided against appellant.

Summary

Issues:
Claim of refund of Service Tax paid on warehousing service; rejection of refund claim based on unjust enrichment.

Analysis:
The appeal was filed against the rejection of the claim of refund of Service Tax paid by the appellant on warehousing service. The appellant argued that investigations were opened against them regarding the demand of Service Tax raised for warehousing service related to abandoned cargo. The Tribunal had set aside the demand of duty in a previous case. The appellant subsequently filed a refund claim for the Service Tax and interest paid on such services, which was sanctioned by lower authorities but credited to the Consumer Welfare Fund due to unjust enrichment concerns. The appellant contended that the burden of duty had not been passed on to any client and submitted a Chartered Accountants certificate to support this claim. However, the refund was rejected on the grounds that the Service Tax paid was shown as expenses in the books of accounts and there was no evidence provided to show that the burden of Service Tax had not been passed on.

The Revenue argued that the appellants had discharged Service Tax from net realizations made on account of Balance Ground Rent, which was considered as passed on to service recipients. They relied on previous tribunal decisions to assert that the burden of Service Tax had been passed on due to the method of payment and accounting treatment. The Revenue also highlighted that the amount claimed as refund had already been adjusted in the Profit and Loss Account of the appellant, indicating passing on of the burden of tax. The Revenue further emphasized that a mere C.A. certificate was not sufficient to establish non-passing on of the tax burden.

The Tribunal analyzed the submissions and evidence presented by both parties. They observed that the appellants had treated the Service Tax as a normal expenditure, shown in their books of accounts, indicating passing on the burden to customers. The Tribunal considered the C.A. certificate provided by the appellant but found it lacking in substantive reasoning. They referred to legal precedents to emphasize that the burden of tax passing on could be inferred from the accounting treatment and pricing practices. The Tribunal concluded that the appellant had not provided sufficient evidence to prove that the burden of Service Tax had not been passed on to customers, leading to the dismissal of the appeal.

In conclusion, the Tribunal found no merit in the appeal and dismissed it, upholding the rejection of the refund claim based on the principle of unjust enrichment.

Judgment:
The appeal was dismissed by the Tribunal on 16/6/17.