2020 (4) TMI 384 - AT - Service Tax

Refund of Service Tax - exempt service - construction service provided to AIIMS, Jodhpur - refund claimed on the ground that by virtue of Section 102 of Finance Act, 2016, the service provided to government institution was made exempt with retrospective effect - rejection on the ground of unjust enrichment - HELD THAT - The appellant, though initially recovered the amount of service tax on the service which was exempted as per Section 102 of Finance Act, 2016 but subsequently the amount of service tax was returned and certificate to this effect was produced by the learned Counsel, however, this is subsequent development. The said certificate was not produced before the Adjudicating Authority. However, the same was produced before the Commissioner (Appeals) but from the findings of Commissioner (Appeals), the said certificate was not considered. This being the factual aspect, the issue needs to be verified by the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
Claim for refund of service tax paid on construction service provided to a government institution. Application of unjust enrichment doctrine. Admissibility of Cenvat credit in case of exemption claimed.

Analysis:
The appellant claimed a refund of service tax paid on construction service provided to a government institution, AIIMS, Jodhpur, citing exemption under Section 102 of Finance Act, 2016. Both lower authorities rejected the claim, stating that the service tax was recovered from the service recipient, AIIMS, Jodhpur, and thus, the refund was barred by unjust enrichment. The appellant argued that the service tax amount was later returned to AIIMS by adjusting it against subsequent receivables, supported by a certificate from AIIMS. Reference was made to the Supreme Court judgment in CCE vs. Addison & Co. Limited, emphasizing that if the tax amount is subsequently reversed, the incidence is not passed on. The Revenue reiterated the lower authorities' findings, asserting that once the tax was charged in the bill and recovered from the service recipient, the doctrine of unjust enrichment applied. Additionally, the Revenue contended that the Cenvat credit availed by the appellant was inadmissible due to claiming exemption, suggesting a reduction in the refund amount by the Cenvat credit taken.

Upon review, the Member (Judicial) noted that though the appellant initially recovered the service tax amount, it was later returned to the service recipient, as evidenced by the certificate produced. Referring to the Supreme Court precedent, it was observed that if the tax amount is subsequently reversed, the incidence is not passed on. However, the certificate was not considered by the lower authorities. The Member found that the incidence was not passed on prima facie. The matter required verification by the Adjudicating Authority. Regarding the Cenvat credit, it was agreed that since the appellant claimed exemption, the credit availed should be deducted from the total refund amount. Consequently, the impugned order was set aside, and the appeal was allowed for a fresh order to be passed after proper examination of the factual aspects.

In conclusion, the judgment addressed the refund claim concerning service tax paid on construction service to a government institution, analyzing the application of the unjust enrichment doctrine and the admissibility of Cenvat credit in cases of exemption claimed. The decision highlighted the importance of verifying factual aspects and considering subsequent developments in determining whether the tax incidence was passed on, emphasizing compliance with legal principles and precedents in adjudicating such matters.