2021 (7) TMI 374 - AT - Service Tax

Refund of service tax paid - claim hit on the ground of time limitation - allegation also that appellant did not produce documentary evidence to prove that the burden of service tax paid by him had not been passed on to their customers - principles of unjust enrichment - HELD THAT - There is no dispute regarding the taxability of the impugned activity. Further, even before the issuance of the said Circular by the Board, the Tribunal Chennai in the case of Indian Hume Pipe Company Limited vs. CST, Trichy 2008 (7) TMI 71 - CESTAT, CHENNAI has held that the impugned activity is not taxable under the category of Erection, Commissioning and Installation Service . Unjust enrichment - HELD THAT - The appellant has placed on record the letters issued by both the service recipient i.e., BSNL and TATA Teleservices in Annexure - D and E which makes it abundantly clear that no service tax has been charged and collected in respect of work orders during the relevant period. Further, on perusal of the work orders in Annexure - F issued by BSNL for the relevant period, it clearly suggests that no service tax was neither charged nor collected by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim not barred by limitation, Taxability of trenching and laying cables activity, Applicability of Circular No.123/5/2010-TRU, Unjust enrichment, Benefit of Circular applied retrospectively

Analysis:
1. Refund claim not barred by limitation: The appellant filed an appeal against the Order-in-Original rejecting the refund claim as barred by limitation. The Hon'ble High Court allowed the appeal, holding that the claim was not hit by limitation. The appellant fulfilled all conditions specified in Section 11B of the Central Excise Act, entitling them to the refund.

2. Taxability of trenching and laying cables activity: The appellant undertook trenching and laying cables for BSNL and TATA Teleservices. The Government of India clarified that this activity is not taxable under service tax. The appellant filed a refund claim after paying service tax, supported by documents showing no service tax was charged or collected from customers. The Commissioner (A) and Tribunal initially upheld the rejection of the claim, but the High Court's order favored the appellant.

3. Applicability of Circular No.123/5/2010-TRU: The Circular issued by the Board clarified the taxability of the activity. The AR argued that the Circular was not applicable retrospectively, citing precedents. However, the appellant contended that beneficial Circulars should apply retrospectively, supported by relevant case laws.

4. Unjust enrichment: The appellant provided letters from BSNL and TATA Teleservices confirming no service tax was charged or collected for the work orders. This evidence, along with work orders showing no service tax was levied, supported the appellant's claim of no unjust enrichment. The High Court's judgment favored the appellant on this aspect as well.

5. Benefit of Circular applied retrospectively: The appellant argued for the retrospective application of the beneficial Circular, while the AR contended for prospective application. The appellant cited case laws supporting their stance, emphasizing the need for a favorable interpretation of the Circular.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, following the High Court's judgment that the refund claim was not barred by limitation and the appellant was entitled to the refund based on the non-taxable nature of the activity and absence of unjust enrichment.