2018 (12) TMI 790 - AT - Service Tax

Refund of service tax paid erroneously - no service was provided - rejection on the ground of time limitation and unjust enrichment - period from April 2004 to August 2007 - Held that - The refund claim has been filed on 14.3.2008. The Ministry of Company Affairs has issued the order of amalgamation on 30.4.2007. Further, in this order it is specifically stated that the amalgamation is to take effect from 1.4.2004 - In the present case, they have filed the refund claim within one year of the order passed by the Ministry of Company Affairs. In such a case, the refund claim which has been filed within one year after receiving the order or after coming to know about the amalgamation has to be considered to be made within the time prescribed under section 11B of the Act - thus, the refund claim is not hit by time bar. Unjust enrichment - Held that - The Tribunal in the case of Usha International Ltd. 2016 (3) TMI 205 - CESTAT NEW DELHI after analyzing the issue held that the assessee is eligible for refund as the service was rendered to self and the burden cannot be passed on to one self. Further, in the case of M/s. Sescot Sheet Metal Works Ltd. Vs. Commissioner of Customs 2015 (4) TMI 386 - MADRAS HIGH COURT , the jurisdictional High Court held that the doctrine of unjust enrichment is inapplicable to the State (PSU), and therefore it cannot tantamount passing the burden to any other person. The rejection of refund is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on time bar and unjust enrichment.

Analysis:
1. Time Bar Issue: The appellant, a public sector undertaking, provided storage services to another company before an amalgamation took place. The Ministry of Company Affairs sanctioned the merger with effect from 1.4.2004. The appellant filed a refund claim on 14.3.2008 seeking a refund of service tax paid for the period from April 2004 to August 2007. The authorities rejected the claim as time-barred. However, the Tribunal noted that the amalgamation order's appointed date was 1.4.2004, and the refund claim was filed within one year of the Ministry's order. Citing relevant legal provisions and precedents, the Tribunal held that the claim was not time-barred, as it was filed within the prescribed period after the date of the amalgamation order.

2. Unjust Enrichment Issue: The appellant argued that post-amalgamation, the services provided were essentially to oneself, eliminating the question of unjust enrichment. Referring to a Tribunal decision in a similar case, the appellant contended that the burden of service tax could not be passed on to another entity post-amalgamation. The Tribunal further cited a High Court ruling that the doctrine of unjust enrichment does not apply to a State-owned enterprise. Relying on these precedents, the Tribunal concluded that the rejection of the refund claim on the grounds of unjust enrichment was incorrect.

In conclusion, the Tribunal found the rejection of the refund claim unjustified and set aside the impugned order, allowing the appeal with any consequential relief. The decision was pronounced on 4.12.2018 by the Appellate Tribunal CESTAT CHENNAI, with detailed arguments presented by both parties' representatives.