2019 (7) TMI 1349 - AT - Service Tax

Refund of service tax paid erroneously - commission paid to the overseas commission agents - reverse charge mechanism - POPOS Rules - time limitation - unjust enrichment - HELD THAT - It is not in dispute that the Place of Provision of Service Rules, 2012 has been amended w.e.f. 1.10.2014, whereunder, no service tax is to be paid on the commission paid to the overseas commission agents. Consequently, the Appellants became eligible to claim refund of service tax paid during the period October 2014 to September 2015 - refund allowed. Time limitation - objection of the learned A.R. for the Revenue is that a portion of demand is barred by limitation, being filed beyond the period of one year - HELD THAT - The amount of service tax paid and covered under the period of one year from the relevant date as laid down under Section 11B of Central Excise Act, 1944 is admissible as the Appellant had reversed the credit availed on the amount of service tax paid - refund rejected for the period under limitation. Unjust Enrichment - HELD THAT - The issue is covered by the judgment of this Tribunal in the case of NEEDLE INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMISSIONER OF C. EXCISE, SALEM 2013 (11) TMI 1688 - CESTAT CHENNAI where on similar issue, the Appellants were already allowed refund of the service tax paid for their unit situated at Nadiad - refund allowed. Appeal allowed in part.

Summary

Issues Involved:
Appeal against denial of refund claim for service tax paid under reverse charge mechanism based on the Place of Provision of Service Rules, 2012 amendment.

Detailed Analysis:

Issue 1: Refund Claim Eligibility
The Appellants sought a refund of service tax amount paid on commission to overseas agents under reverse charge mechanism. The amendment to the Place of Provision of Service Rules, 2012 exempted such payments from service tax liability. The Appellants filed the refund claim within the stipulated time, except for a portion beyond the limitation period. The Adjudicating authority raised concerns regarding the reversal of CENVAT Credit post-show cause notice issuance. However, the Appellants contended that the reversal was prompt upon receiving the notice, ensuring the amount was not recovered from customers. The Tribunal noted the Appellants' eligibility for refund within the limitation period and referenced a similar case where refund was granted for a different unit.

Issue 2: Unjust Enrichment
The Adjudicating authority and the Commissioner (Appeals) cited unjust enrichment as a reason to deny the refund claim. The Appellants argued that the amount paid under reverse charge mechanism was not passed on to customers, thus not falling under unjust enrichment principles. The Tribunal relied on the precedent set by the Needle Industries case to support the Appellants' position. The Tribunal found no grounds to deny the refund claim based on unjust enrichment principles, especially considering the timely reversal of CENVAT Credit to facilitate the refund.

Conclusion:
The Tribunal allowed the appeal partly, setting aside the denial of the refund claim within the limitation period. The judgment emphasized the Appellants' entitlement to the refund based on the Place of Provision of Service Rules amendment and the absence of unjust enrichment in the case. The decision highlighted the importance of timely compliance and adherence to legal provisions in claiming refunds under the reverse charge mechanism.