2018 (4) TMI 168 - AT - Service Tax

Refund claim - unjust enrichment - the amount of refund not shown as receivables in their books of accounts - crux of the argument of the Revenue is that since the amount of service tax paid has been shown as an expenditure in their books of accounts, therefore, being a part/cost of the service, accordingly, recovered from the customers, hence the incidence of duty has been passed on to others - Held that - even though the amount of refund was shown as expenditure in their books of accounts, it cannot be construed that the incidence of tax has not been passed on to others - appeal dismissed - decided against appellant.

Summary

Issues Involved:
- Admissibility of refund claims under the retrospective exemption Notification.
- Allegation of unjust enrichment due to the incidence of service tax being passed on to customers.
- Interpretation of accounting principles regarding the recovery of service tax from customers.
- Consideration of Chartered Accountant's Certificate as evidence of non-recovery of service tax from customers.

Analysis:

Admissibility of Refund Claims: The appellants, engaged in providing taxable services as Tour Operators, filed refund claims under a retrospective exemption Notification. The tax paid during the relevant period was deemed admissible as a refund. However, the department transferred the sanctioned refunds to the consumer welfare fund on grounds of unjust enrichment, leading to the appeals before the Tribunal.

Allegation of Unjust Enrichment: The crux of the dispute revolved around whether the incidence of service tax had been passed on to customers. The Revenue contended that since the tax amount was shown as expenditure in the appellants' books, it was considered a cost of service and subsequently recovered from customers. The Tribunal referenced precedents and upheld the Revenue's argument, emphasizing that the burden of tax had indeed been passed on to others.

Interpretation of Accounting Principles: The appellants argued that the service tax was not separately shown on tickets/invoices and that prices remained consistent before and after the exemption Notification, implying non-passing of the tax burden to customers. They presented a Chartered Accountant's Certificate to support their claim. However, the Tribunal, relying on judgments and accounting principles, concluded that the tax burden had been passed on based on the treatment of the tax amount in the appellants' accounts.

Chartered Accountant's Certificate: The Tribunal scrutinized the Chartered Accountant's Certificate provided by the appellants, which certified non-recovery of service tax from customers. Despite this, the Tribunal found the certificate lacking in substance and reasoning, ultimately dismissing its effectiveness in proving non-passing of the tax burden. The Tribunal's decision was influenced by the treatment of the tax amount in the appellants' financial records, indicating that the tax burden had indeed been transferred to customers.

In conclusion, the Tribunal upheld the decision to transfer the refund claims to the consumer welfare fund, citing precedents and accounting principles to support the finding that the tax burden had been passed on to customers. The appeals were dismissed based on the Tribunal's analysis and interpretation of the evidence presented.