2021 (7) TMI 1195 - AT - Service Tax

Refund of erroneous payment of service tax - time limitation - submission of required documents - principle of unjust enrichment - HELD THAT - Rule 2(bc) of Service Tax Rules, refers to the meaning of body corporate in Section 2(7) of the Companies Act, wherein any other body corporate which includes a LLP is specifically excluded from the definition of body corporate. Thus, the appellant as a LLP, is not required to pay service tax under the reverse charge mechanism during the period under dispute. It is held that the appellant is entitled to refund of the service tax paid erroneously under reverse charge, as per the refund application - the adjudicating authority is directed to grant refund within a period of 45 days from the date of receipt of a copy of this order with interest for the period starting after three months from the date of refund application till the date of grant of refund. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Timeliness of the refund claim filing
2. Admissibility of the refund claim
3. Submission of required documents
4. Application of the principle of unjust enrichment

Analysis:

Issue 1: Timeliness of the refund claim filing
The appellant, an LLP, filed a refund application for erroneous service tax payment under the reverse charge mechanism within the prescribed one-year time limit. The total refund amount was &8377;2,23,913. The appellant contended that they were not covered under the definition of a body corporate, as per Notification No. 30/2012. The adjudicating authority referred to various legal definitions and rules, concluding that an LLP is a body corporate with perpetual succession and a separate legal entity from its partners. Therefore, the refund claim was timely filed.

Issue 2: Admissibility of the refund claim
The Assistant Commissioner framed several issues to decide the refund claim, including whether it was admissible. The appellant argued that as an LLP, they were not liable to pay service tax under the reverse charge mechanism. The Commissioner (Appeals) referred to relevant notifications and legal provisions but rejected the appeal. However, the appellate tribunal held that the appellant, being an LLP, was not required to pay service tax under the reverse charge mechanism, and thus, the refund claim was admissible.

Issue 3: Submission of required documents
The appellant submitted all necessary documents to support their refund claim, including details of erroneous service tax payments made under the reverse charge mechanism for manpower supply services. The tribunal found that the appellant had complied with the document submission requirements.

Issue 4: Application of the principle of unjust enrichment
The tribunal determined that the principle of unjust enrichment was not attracted in this case. The appellant had paid the service tax erroneously under the reverse charge mechanism, and as an LLP, they were entitled to a refund. The tribunal set aside the impugned order and directed the adjudicating authority to grant the refund with interest within 45 days.

In conclusion, the appellate tribunal allowed the appeal, holding that the appellant LLP was not liable to pay service tax under the reverse charge mechanism and was entitled to a refund of the erroneously paid amount.