2019 (3) TMI 49 - AT - Service Tax

Refund of service tax paid - Classification of services - site formation and clearance, excavation and earth moving and demolition services or not - doctrine of unjust enrichment - Section 11B of the Central Excise Act, 1944 - Held that - The adjudicating authority as well as the first appellate authority have ventured beyond the period in question and have recorded that appellants have raised invoices relating to the period but nothing concrete has brought on record to show that the appellant had in fact collected the amounts of service tax for which he has filed the refund claim. We notice that the entire confusion is created by the adjudicating authority and the first appellate authority by considering the documents which were beyond the period in question for which the refund claim has been sought - The Chartered Accountant s Certificate extract which is produced in the Order-in-Original is itself very specific that the certificate is for the period in dispute up to September, 2006 only. Further, we find that learned CA was correct in bringing to our notice that the ledger accounts of the customers in their accounts which are annexed from Page 57to 101 of the paper book indicates no recovery of service tax amount during the disputed period or subsequently also. If the debit notes are not acted upon and not recorded as receivables in the books of the appellant are not receiving any sum as service tax from the customers in any manner and hence it is to be held that service recipient has not paid the service tax element to the appellant. Therefore, doctrine of unjust enrichment is not attracted in this case. The department has not produced any evidence whatsoever that service tax has been paid by the service recipient and if so the mode of payment to appellant. Hence only on the basis of conjectures and premises the lower authorities have rejected the refund claim which in our view is incorrect and the statistics which are sought to be mentioned in the Order-in-Original by the adjudicating authority are irrelevant to the facts of the case it i.e., the refund claim is for a specific period i.e., 16.06.2005 to 30.09.2006. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on unjust enrichment doctrine.

Analysis:
The appeal was against the rejection of a refund claim by the adjudicating authority, upheld by the first appellate authority, regarding service tax payments made by the appellant for the period 16.06.2005 to 30.09.2006. The appellant claimed that the services provided were correctly classifiable under mining services introduced from 01.06.2007. The Tribunal in a previous order dated 09.12.2010 had allowed the refund claim for the mentioned period. The current proceedings challenged the rejection of the refund claim based on the allegation that the appellant had collected service tax from their service recipients through debit notes. The first appellate authority found that the appellant indeed raised debit notes and collected service tax, contrary to the Chartered Accountant's Certificate provided by the appellant for the disputed period. However, the Tribunal noted that the findings of the first appellate authority went beyond the allegations in the show cause notice, and the documents considered were beyond the period in question for the refund claim.

The Chartered Accountant's Certificate specifically stated that no service tax was collected from service recipients during the disputed period. The ledger accounts of the customers also showed no recovery of service tax during the disputed period or subsequently. The department's argument that debit notes were issued for service tax recovery in November 2006 was not supported by the appellant's ledger accounts, indicating that the service recipient did not pay the service tax to the appellant. The Tribunal held that the doctrine of unjust enrichment did not apply in this case, as there was no evidence that service tax was paid by the service recipients to the appellant. The lower authorities' rejection of the refund claim was deemed incorrect, as it was based on conjectures and irrelevant statistics not related to the specific refund claim period.

The Tribunal agreed with the appellant's Chartered Accountant that the Certificate could not be ignored unless contrary evidence proved its inaccuracy. Citing relevant case laws, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The impugned order was considered unsustainable and was overturned by the Tribunal's decision pronounced on 28.02.2019.