2006 (2) TMI 8 - AT - Service Tax

Refund - Unjust enrichment - Supply and installatin of authmatic fare collection system for DMRC - tax paid as Consultancy Engineer s Service and claimed refund subsequently - if assessee prove that incidence of duty has not ben passed, assesee will be eligible for refund - rejection of refund claim by lower authorities on presumption was erroneous - matter remanded

Summary

Issues:
Refund claim rejection based on presumption of passing on Service Tax burden to client.

Analysis:
The appeal challenged the order-in-appeal upholding the dismissal of the refund claim, which was initially allowed by the adjudicating authority. The appellants, registered as "Consulting Engineer," paid Service Tax under the impression that they were liable. They filed a refund claim upon realizing their error, citing a Tribunal decision and the nature of their lump sum contract with Delhi Metro Rail Corporation. The appellate authority concurred with the adjudicating authority's decision.

The Commissioner (Appeals) rejected the appeal, emphasizing that the contract terms indicated a lump sum price inclusive of taxes, leading to the presumption that the Service Tax burden was passed on to the client. The rejection was based on the application of Section 12B of the Central Excise Act and the Finance Act, 1994. The Commissioner highlighted the need for evidence, such as a chartered accountant's certificate and certification from DMRC, to prove that the Service Tax burden was not transferred.

Drawing on a precedent involving Excise duty refund, the Tribunal emphasized the importance of examining the cost structure to determine if taxes were included in the quoted rates. The Tribunal found the lower authorities' rejection of the refund claim based on presumption to be erroneous. It stressed that if the appellants could demonstrate that they did not pass on the Service Tax burden, they were entitled to a refund.

Consequently, the Tribunal set aside the order-in-appeal and remanded the matter to the adjudicating authority for a fresh decision. The appellants were granted the opportunity for a personal hearing and to present evidence supporting their claim. The appeals were allowed by way of remand, with the operative portion pronounced in court.