2020 (9) TMI 425 - Commissioner - GST

Refund of Service Tax - cancellation of booking of flat - denial on the ground that the assessment was final and not provisional - doctrine of unjust enrichment - HELD THAT - It is important that Section 142(5) provides that any amount eventually accruing shall be paid in cash. I further find that the clause notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 is extremely crucial. It free such claims from the fetters of limitation Ich is provided under sub-Section (1) of Section 11B. The only thing that is not overridden is the requirement of fulfillnent of unjust enrichment clause as provided under sub-Section (2) of Section 11B. No service has been provided to the appellant in this case and therefore the provision of relevant date of one year and date of payment of payment as per Section 11B of CEA cannot be made applicable in the present case. The service tax paid by the appellant is in the nature of deposit and not service tax. Even if the payment is in the nature of service tax, the date of cancellation of flat will be considered as the relevant date for calculating the time limit of one year, as the event that led to the refund of taxes is the cancellation by the buyer. If the cancellation would not have happened, the refund claim would not have arisen at all. Doctrine of Unjust Enrichment - HELD THAT - Appellant is the customer who had booked the flat, It is on record that the component of Service Tax was recovered from him by the builder and paid to the exchequer. It is also on record that the builder has not refunded Service Tax to the appellant. It is therefore clear that appellant has borne the incidence of Service Tax whose refund is being claimed, It is crystal clear that the claim is not hit by the doctrine of unjust enrichment. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Refund of service tax on cancellation of booking of flat.
2. Applicability of Section 142(5) of CGST Act, 2017.
3. Time limit for refund under Section 11B of Central Excise Act, 1944.
4. Doctrine of unjust enrichment.

Issue-Wise Detailed Analysis:

1. Refund of Service Tax on Cancellation of Booking of Flat:
The appellant booked a flat and paid service tax, which was not refunded upon cancellation. The Adjudicating Authority (AA) rejected the refund claim, stating that the tax was rightfully collected as the service was deemed provided when the consideration was received before the completion certificate. The appellant argued that no service was provided as the booking was cancelled, and thus, the service tax should be refunded.

2. Applicability of Section 142(5) of CGST Act, 2017:
The appellant contended that Section 142(5) of the CGST Act, 2017, which is similar to Rule 6(3) of the Service Tax Rules, 1994, allows for a refund of taxes on services not provided. The AA disagreed, noting that Section 142(5) applies only to refunds admissible under the existing Central Excise and Service Tax laws, and since the claim was filed under the GST regime, it was not applicable. The Commissioner (Appeals) found that Section 142(5) does allow for such refunds and cited CBIC FAQs to support this interpretation.

3. Time Limit for Refund Under Section 11B of Central Excise Act, 1944:
The AA rejected the refund claim as time-barred under Section 11B, which requires claims to be filed within one year from the date of payment. The appellant argued that the time limit should be computed from the date of cancellation, not the date of payment. The Commissioner (Appeals) agreed, stating that the relevant date for the refund claim should be the date of cancellation, as this was the event that led to the refund claim.

4. Doctrine of Unjust Enrichment:
The AA applied the doctrine of unjust enrichment, stating that the appellant had not proved that the tax incidence was not passed on to another party. The appellant provided an indemnity bond and a CA certificate from the builder, confirming that the service tax was not refunded or claimed by the builder. The Commissioner (Appeals) found that the appellant had borne the incidence of the service tax and that the claim was not hit by the doctrine of unjust enrichment.

Conclusion:
The Commissioner (Appeals) set aside the AA's order, allowing the refund claim. The decision acknowledged that no service was provided due to the cancellation, making the service tax refundable under Section 142(5) of the CGST Act, 2017. The relevant date for the refund claim was determined to be the date of cancellation, not the date of payment, and the doctrine of unjust enrichment was found inapplicable as the appellant bore the tax incidence. The appeal was allowed with consequential relief.