2021 (11) TMI 16 - AT - Service Tax

Refund of service tax paid - time barred claim or not - unjust enrichment - Section 11B of the Central Excise Act - HELD THAT - Admittedly Section 11B of the Central Excise Act, 1944 provides for a limitation period of one year from the relevant date for filing of a refund application and also provides provision for establishment of the fact that tax has to be paid by the claimant as well as incidence of such tax has not been passed on to any other person by the claimant. However, going by the explanation that is appended to 11B which has defined relevant date , thus, appellant s case has been covered under Section 11B (5) e(c). Doubt may arise at this point as to what kind of order would make the appellant entitled to claim a refund? Admittedly, in the instant case there is no direction for payment of refund except a finding that the said amount of ₹ 7,65,445/-, as a component of tax under Reverse Charge Mechanism, was not payable. Explanation of relevant date at 11 B (ec) clearly indicates that if duty becomes refundable as a consequence of order/judgment , then the period of one year is to be calculated from the date of the order/judgment. Therefore, without prejudice to the submissions made for and against the issue, it can invariably lead a rational human being to a conclusion that there is no requirement of an express direction for refund of service tax paid that was not payable if as a consequence of judgment or decree such duty becomes refundable - in the instant case it is in respect of appellant itself the said order that duties was not leviable has been passed that arose as a consequence against demand of interest on the said component of duty that was paid by the appellant, may be under mistake of fact. Appellant is entitled to get refund of ₹ 7,65,445/- with applicable interest as per Section 11BB of the Central Excise Act effective after three months of filing of its original refund application - appeal allowed.

Summary

Issues:
- Denial of refund claim by Commissioner of Service Tax
- Barred refund by limitation
- Test of unjust enrichment

Denial of Refund Claim by Commissioner of Service Tax:
The judgment involves the denial of a refund claim of ?7,65,445 by the Commissioner of Service Tax (Appeals) on the grounds of limitation and unjust enrichment. The appellant's sister concern had paid service tax on reverse charge mechanism against services availed from an overseas company before merging with the appellant. The Commissioner (Appeals) held that no service tax was leviable on the said service prior to a specific date. The appellant filed a refund application, which was adjudicated as time-barred and lacking unjust enrichment. The appellant challenged this decision before the Tribunal.

Barred Refund by Limitation:
The appellant argued that the refund claim was filed within one year from the date of the appellate authority's order and that the Commissioner (Appeals) exceeded the scope by considering unjust enrichment. The appellant cited case laws to support the refund claim, emphasizing that the service tax was paid due to a mistake of fact, making it refundable. The respondent-department, however, supported the Commissioner (Appeals) decision, referring to legal precedents and statutory limits. The Tribunal analyzed Section 11B of the Central Excise Act, noting that the relevant date for filing a refund application in this case was the date of the appellate authority's order. The Tribunal found the refund application timely filed and set aside the Commissioner (Appeals) decision.

Test of Unjust Enrichment:
The Tribunal addressed the issue of unjust enrichment raised during the proceedings. It considered the legal position established by the appellate authority's order that no service tax was leviable on the specific service. The Tribunal clarified that if duty becomes refundable as a consequence of a judgment or order, the period for claiming a refund is calculated from the date of such judgment or order. In this case, the Tribunal concluded that the appellant was entitled to a refund as the duty was not leviable, and the appellant had paid it under a mistake of fact. The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and directing the respondent-department to pay the refund amount with applicable interest.

This comprehensive analysis of the judgment highlights the key issues of denial of refund claim, limitation on refunds, and the test of unjust enrichment as addressed by the Tribunal in the case.