2020 (3) TMI 260 - AT - Service Tax

Refund of pre-deposit - period of limitation - unjust enrichment - dispute related to demand of service tax settled in favor of appellant / assessee - HELD THAT - The amount was paid by way of pre-deposit subsequent to passing of the order-in-original pending disposal of appeal as required under Section 35F of the Central Excise Act. As per Section 35FF, an assessee is entitled to refund by way of consequential relief on being successful in appeal. Section 35FF provides (as amended / substituted w.e.f. 06.08.2014) Where any amount deposited by the appellant under Section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of the amount, till the date of refund of such amount. Thus, an assessee is ipso facto under the law, entitled to refund on being successful in appeal of the amount deposited under Section 35F of the Act read with Section 83 of the Finance Act, 1994. Further, Section 35F read with Section 35FF does not provide for any refund application to be made by the assessee after being successful in appeal - the limitation prescribed under Section 11B is not applicable for refund claim under Section 35FF. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of service tax on renting of immovable property by a statutory body under the Agriculture Produce Market Act, 1961.
2. Entitlement to refund of service tax paid by the appellant.
3. Applicability of limitation period for filing refund claim.
4. Consideration of unjust enrichment in refund claims.
5. Interpretation of provisions under Section 35F and 35FF of the Central Excise Act.

Analysis:

1. The appellant, a statutory body under the Agriculture Produce Market Act, 1961, collected 'mandi shulk' and rented out properties within the agriculture produce market. A show cause notice was issued for non-payment of service tax on the rent received, which was adjudicated by the Commissioner (Appeals) in favor of the appellant, holding them entitled to exemption under Notification No. 6/2005-ST.

2. Subsequently, the appellant deposited service tax for certain periods and applied for a refund based on a Tribunal's decision that such entities were exempt under the mega exemption (negative list) effective from 01.06.2012. The refund claim was partially rejected on grounds of limitation and unjust enrichment, leading to an appeal before the Commissioner (Appeals).

3. The Commissioner (Appeals) rejected the refund claim for one portion as time-barred under Section 11B, noting that the limitation for refund starts from the date of the appellate court's decision. The appellant contested this decision, highlighting the absence of a ruling on unjust enrichment in the order.

4. The Tribunal considered the provisions of Section 35F and 35FF of the Central Excise Act, stating that an assessee is entitled to a refund upon success in appeal without the need for a separate refund application. It held that the limitation under Section 11B does not apply to refund claims under Section 35FF, setting aside the impugned order and allowing the appeal for refund of both amounts with interest.

5. Additionally, the Tribunal recognized the nature of one amount as a revenue deposit, as the appellant was exempt from paying service tax post-June 2012. The appellant was deemed entitled to consequential benefits, including a refund with interest, based on the provisions of the Finance Act.