2020 (8) TMI 227 - AT - Service Tax

Refund of Service Tax - principles of unjust enrichment - refund sought during the period 01.04.2016 to 30.09.2016 on the ground that any housing scheme of the State Government is exempted from the payment of service tax by virtue of Notification No. 09/2016-ST dated 01.03.2016 - HELD THAT - It is not disputed that as per the agreement between the appellant and the Rajasthan Government the construction of housing complex which was on agreed price, if any, service tax is payable, the same shall be payable by the appellant which means the amount of service tax is included in the value of service provided, if any, payable as no service tax is payable by the appellant. Therefore, question of recovery of service tax does not arise. The bar of unjust enrichment is not applicable to the facts of the case, therefore, the appellant is entitled for refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on unjust enrichment.

Analysis:
The appellant appealed against the rejection of their refund claim due to failing the unjust enrichment test. The appellant, engaged in constructing residential complexes for the Rajasthan Housing Board, paid service tax between April 2016 and September 2016. They believed the housing scheme exempted them from service tax payment as per Notification No. 09/2016-ST. The refund claim was denied on the grounds of unjust enrichment, assuming the appellant passed on the service tax cost to the service recipient. The appellant argued that the agreement with the Rajasthan Housing Board included a cum-duty price, indicating no service tax liability for them. The appellant sought refund approval, contesting the application of unjust enrichment.

The Authorized Representative for the Department supported the initial decision. After hearing both sides, the Member (Judicial) referred to a similar case involving Jagran Prakashan Ltd. vs. Commissioner of Central Excise, Delhi-I. In that case, the Tribunal ruled in favor of the appellant, stating that unjust enrichment did not apply when the service provider did not bear the service tax cost. Applying this precedent, the Member found that the appellant, in their agreement with the Rajasthan Government, had accounted for any potential service tax liability in the agreed price. Since the appellant was not liable to pay service tax, the issue of passing on the tax did not arise. Consequently, the Member held that unjust enrichment did not apply in this case, allowing the refund claim.

The impugned order was deemed without merit and set aside, granting the appeal with any consequential relief. The decision was dictated and pronounced in open court, favoring the appellant's entitlement to the refund.