2020 (2) TMI 46 - AT - Service Tax

Business Auxiliary Service - allegation that income earned as commission agent had not been correctly declared in their ST-3 Returns during 2004-05 - time limitation - Section 11B of the Central Excise Act, 1944 - principles of unjust enrichment - HELD THAT - From the very beginning, stand of the appellant was that he is not collecting Service Tax from any of his customers and as per the Notification, the appellant is also not liable to pay Service Tax but in spite of that he was made to pay the Service Tax which the appellant paid under protest. Further, the appellant vide letter dated 25.11.2005 written to Deputy Commissioner has stated that the appellants are remitting Service Tax under protest as the service recipients were not paying any Service Tax. This letter is sufficient to prove that Service Tax was paid under protest and once the Service Tax is paid under protest then as per proviso to Section 11B of the Central Excise Act, 1944, the bar of limitation will not be applicable and further the appellant had also produced sufficient proof on record to show that they have not collected the Service Tax from their recipients therefore the question of unjust enrichment will not be applicable. The impugned order rejecting the refund on time bar is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim of Service Tax paid by the appellant.
2. Applicability of limitation under Section 11B.
3. Principle of unjust enrichment.

Refund Claim of Service Tax:
The appellant, a commission agent for buying and selling raw cashew and cashew kernel, filed a refund claim for Service Tax paid during October 2004 to September 2013. The claim was based on the exemption for services provided by a Commission Agent in relation to agricultural produce. The claim was challenged due to submission after one year from payment date and lack of mention of refund in previous favorable order.

Applicability of Limitation under Section 11B:
The appellant contended that the refund claim was not time-barred as the Service Tax was paid under protest, exempting it from the limitation period under Section 11B. The appellant provided evidence of not collecting Service Tax from clients, supporting the argument against unjust enrichment.

Principle of Unjust Enrichment:
The appellant argued that the Appellate Authority failed to address the issue of unjust enrichment adequately. Evidence was presented, including confirmation letters from clients stating no Service Tax collection. The appellant emphasized that payment under protest exempts the claim from unjust enrichment principles.

The Tribunal found that the appellant consistently maintained not collecting Service Tax and paid it under protest. The letter to the Deputy Commissioner supported the protest claim. As per the proviso to Section 11B, the limitation period does not apply when payment is made under protest. The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order on the grounds of time bar, emphasizing the protest lodged by the appellant.

This judgment highlights the importance of documenting protests against tax payments and provides clarity on the applicability of limitation periods and unjust enrichment principles in refund claims related to Service Tax.