2021 (10) TMI 532 - AT - Service Tax

Refund of service tax paid - services provided to Military Engineering Services (MES), which were exempted from payment of service tax vide N/N. 25/2012-ST dated 20/06/2012 as amended by N/N. 09/2016-ST dated 01/03/2016 - denial of refund on the ground of unjust enrichment - HELD THAT - This Bench on an earlier occasion, in an almost identical situation, in the case of SN ATIWADKAR VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM 2019 (5) TMI 661 - CESTAT BANGALORE where it was held that the appellant is claiming the refund as a representative of the MES and not on his own account and therefore the principle of unjust enrichment under the provisions of Section 11B of the Central Excise Act is not applicable to the present case. The denial of refund cannot be sustained and hence, the impugned order deserves to be set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim for service tax paid on services provided to Military Engineering Services (MES) rejected on grounds of unjust enrichment.

Analysis:
The appellant, a service provider, filed a refund claim for service tax paid on services provided to MES, which were exempted from service tax. The adjudicating authority rejected the refund claim on the grounds of unjust enrichment. The appellant appealed to the Commissioner of Central Excise and Central Tax, Karwar, who allowed the appeal but denied the refund based on unjust enrichment. The appellant then filed the present appeal challenging the denial of refund.

During the hearing, the appellant's representative argued that the MES was the ultimate consumer, and the tax burden was borne solely by them, not passed on to any other person. Citing a previous decision, the representative contended that the appellant was claiming the refund as a representative of MES, not for their own account, thus the principle of unjust enrichment did not apply. The representative also presented evidence that other Commissionerates were allowing similar refunds under the same notification.

The Tribunal referred to a previous decision in a similar situation and held that since the service tax was reimbursed by MES and the appellant filed the refund claim at the instance of MES, the principle of unjust enrichment did not apply. The Tribunal noted that the denial of refund could not be sustained, especially considering that the service recipient was a Government entity in this case. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential benefits as per law.

In conclusion, the Tribunal allowed the appeal, overturning the denial of the refund claim based on unjust enrichment. The decision was based on the appellant's role as a representative of MES, the specific circumstances of the case, and the precedent set in similar situations.