2018 (5) TMI 883 - AT - Service Tax

Refund claim - Unjust enrichment - time limitation - whether the refund claims filed by them are hit by limitation or otherwise? - Held that - service tax liability on the operations portion is not due to the Government, which would mean that provisions of Section 11B of Central Excise Act, 1944 which lays down the period within which refund claim has to be filed, will not apply to the cases in hand - the question of limitation does not arise in the cases in hand. Unjust enrichment - Held that - the appellant had produced detailed Chartered Accountant certificate, which indicates the bifurcation of the amounts towards maintenance charges and operation charges and has specifically certified that GMR Energy Vemagiri Power Generation Limited has not passed on the service tax liability on the operations part to any one and has borne the burden of the service tax. The certificate which was produced before the lower authorities is also produced before the Tribunal and on perusal of the same, it is found that the said certificate clearly indicates the details on the basis of which the Chartered Accountant has come to a conclusion the amount for which refund claim is preferred, is borne by appellant assessee - decided in favor of assessee. Appeal allowed - decided in favor of assessee.

Summary

Issues:
- Consideration of refund claims filed by M/s GMR Energy Vemagiri Power Generation Limited
- Whether the refund claims are hit by limitation
- Interpretation of the doctrine of unjust enrichment

Analysis:
1. Consideration of Refund Claims:
The judgment revolves around the consideration of refund claims filed by M/s GMR Energy Vemagiri Power Generation Limited. The appellant entered into an agreement with Korea Plant Service & Engineering Company Limited for operation and maintenance of a power plant. The appellant filed refund claims for the service tax paid to KPS, arguing that the service tax liability on the operation portion of the contract is not taxable. The Tribunal found merit in the appellant's argument, citing previous Tribunal orders and held that the appellant is eligible for filing refund claims as they have borne the effect of the service tax paid.

2. Limitation of Refund Claims:
The issue of whether the refund claims are hit by limitation was also addressed in the judgment. The adjudicating authority had held that the refund claims were time-barred based on the date of payment to KPS. However, the Tribunal disagreed with this finding, stating that since the service tax liability on the operation charges is not due to the government, the provisions of Section 11B of the Central Excise Act, 1944 do not apply. Citing a Bombay High Court case, the Tribunal concluded that the limitation period does not apply to refund claims based on service tax paid under a mistake of law.

3. Doctrine of Unjust Enrichment:
The judgment further delved into the interpretation of the doctrine of unjust enrichment. The Revenue argued that the doctrine was not satisfied as the power purchase agreement with APSEB included the service tax element in the unit price of electricity. However, the appellant provided a detailed Chartered Accountant certificate, which indicated the bifurcation of amounts and confirmed that the appellant had not passed on the service tax liability. Relying on a Delhi High Court case, the Tribunal found in favor of the appellant, holding that the doctrine of unjust enrichment was not applicable in this case.

In conclusion, the Tribunal accepted the appeals filed by M/s GMR Energy Vemagiri Power Generation Limited, set aside the impugned orders, and rejected the appeals filed by Revenue. The judgment emphasized the eligibility of the appellant for filing refund claims, the inapplicability of limitation due to the nature of the service tax liability, and the satisfaction of the doctrine of unjust enrichment based on the evidence provided.