2019 (8) TMI 747 - AT - Service Tax

Refund of service tax - input services - Man-power Recruitment Supply Agency Services provided outside India - period Jun. 15 to 03.07.2016 - rejection on the ground of time limitation and on the ground that appellants have not fulfilled the condition under Rule 6A of the Service Tax Rules 1994 in regard to the export of services and also on the ground of doctrine of Unjust Enrichment. Time Limitation - HELD THAT - Undisputedly the refund claim was initially filed on 06.01.2017. The department has returned the refund claim intimating defects in the same. While doing so the department has not mentioned the period by which the defects can be rectified and the refund claim can be resubmitted. The appellants have rectified the defects and resubmitted the refund claim on 03.07.2017. Therefore the date on which the refund claim was originally submitted has to be taken as the date for computing the period of limitation - the rejection of refund claim on the ground of time bar is unjustified. Rejection of refund claim is that the appellant has not fulfilled the conditions of receiving consideration in convertible foreign currency - HELD THAT - When the amount is adjusted in the bank account and remitted to the service provider in India through bank account in Indian currency the same is to be considered as paid in convertible foreign currency - the condition provided in Rule 6A is fulfilled and the services are exported - refund allowed. Unjust enrichment - HELD THAT - It is settled law that taxes cannot be exported and therefore since the services are provided outside India the doctrine of Unjust Enrichment cannot be applied to services exported. In the present case the services having been exported outside India the discussions made by the authority below observing that the appellants have included the element of service tax in the debit note and therefore the refund is hit by doctrine of Unjust Enrichment cannot sustain - the issue of unjust enrichment is also held in favour of the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim time-barred
2. Non-fulfillment of Rule 6A conditions
3. Unjust enrichment doctrine applicability

Analysis:

Issue 1: Refund claim time-barred
The appellant argued that the date of resubmission cannot be considered for calculating the limitation period, citing the decision in M/s.United Phosphorus Ltd. vs Union of India. Additionally, it was contended that since the service tax was paid under a mistake, the limitation under section 11B does not apply, referencing the case of M/s. 3E Infotech vs CESTAT, Chennai. The tribunal agreed, stating that when tax is paid under a mistake, the limitation period does not apply, as held by the jurisdictional High Court. Therefore, the rejection of the refund claim on the grounds of being time-barred was deemed unjustified.

Issue 2: Non-fulfillment of Rule 6A conditions
Regarding the condition of receiving consideration in convertible foreign currency, the appellant clarified that the payment, though remitted in Indian currency, originated from a group company in France, satisfying the requirement. Citing precedents like M/s. Mitsubishi Heavy Industries India Pvt. Ltd., the tribunal held that when the payment is adjusted and remitted through Indian banks, it should be considered as paid in convertible foreign currency. Consequently, the condition under Rule 6A was deemed fulfilled, and the services were considered exported in favor of the appellant.

Issue 3: Unjust enrichment doctrine applicability
The appellant argued that since the services were exported, the doctrine of unjust enrichment does not apply. It was further contended that the service tax element was not collected from the service recipient, as evidenced by bank statements. The tribunal concurred, stating that taxes cannot be exported, and thus, the doctrine of unjust enrichment does not apply to exported services. As the element of service tax was not collected from the service recipient, the issue of unjust enrichment was also decided in favor of the appellant.

In conclusion, the tribunal set aside the impugned order, allowing the appeal with any consequential relief.