2017 (11) TMI 695 - AT - Service Tax

Refund claim - unjust enrichment - Held that - even if the parties to a contract agreed not to pay service tax, but if the tax is chargeable under the provisions of the Act, it has to be paid. Under the facts and circumstances of this case it is admitted fact that the appellant have paid the tax out of its own pocket and not collected the same from the principal-Dishnet Wireless Ltd - the doctrine of unjust-enrichment does not apply - appeal allowed.

Summary

Issues:
Refund claim rejection due to alleged unjust enrichment.

Analysis:
The appellant, a registered dealer under Service Tax provisions, filed a refund claim of ?23,13,649/- for tax paid on advances received for services in Jammu and Kashmir. The claim was rejected on the grounds of unjust enrichment as per a show cause notice issued. The claim was further rejected by the learned Commissioner (Appeals) based on the inclusion of service tax in purchase orders and invoices, leading to the conclusion that the tax was paid as per law. The appellant argued that they did not charge service tax, as evidenced by invoices and a certificate from a chartered accountant, thus unjust enrichment should not apply. The Tribunal found that the appellant had paid the tax from their own funds and not collected it from the principal, hence unjust enrichment did not apply. The Tribunal allowed the appeal, directing the refund of ?23,13,649/- with interest, starting three months from the application date until the refund is granted, as per the Act and Rules. The Adjudicating Authority was instructed to process the refund within 45 days of receiving the order.