2022 (2) TMI 900 - AT - Service Tax

Refund of service tax - Unjust enrichment - Period of limitation - Tax paid on self assessment basis - Claim of refund without challenging the assessment, to claim the benefit of exemption - storage and warehousing services to Food Corporation of India (FCI) through HAFED, Hisar - failure to produce any conclusive/ substantial evidence to prove that the incidence of service tax had not been passed on by them to any other person and hence refund claims will be hit by doctrine of unjust enrichment - no substantial evidence to prove that they were providing storage or warehousing services of agriculture produce to claim the benefit - time limitation - refund claims filed beyond the specified period of one year - HELD THAT - Undisputedly the refund claim has been filed by the Appellant on the basis of the legal opinion obtained by the FCI and not on the basis of any determination towards the tax liability by any authority, tribunal or court, in their case. During the period for which the refund claim has been filed, the Appellant was self assessing his tax liability and reflecting the same in the ST-3 returns filed by them with the department. Nothing has been brought on record to show that appellant has sought modification of the self assessed return by way of an appeal to Commissioner (Appeals) - the refund claim filed by the Appellant is not maintainable. Time limitation - HELD THAT - It is quite evident that in the event were the refund claim has been made under the provisions of the Section 11B of the Central Excise Act, 1944, the period of limitation as provided by the said section will come into play, and refund claim needs to be examined for limitation as per the period of limitation laid down thereunder - Undisputedly CESTAT is the statutory body created under the provisions of the Act, and is not having any extraordinary jurisdiction as conferred by Article 226 of the Constitution - this issue has been considered in detail by the larger bench in case of M/S VEER OVERSEAS LTD. VERSUS CCE, PANCHKULA 2018 (4) TMI 910 - CESTAT CHANDIGARH and by majority view it was held that the refund claim will have to be considered only if filed within the period of limitation as provided by the Section 11B of the Central Excise Act, 1944. Undisputedly the Appellants in the present appeals have filed the refund claims, under Section 11B of the Central Excise Act, 1944, as made applicable to service tax cases by virtue of Section 83 of the Finance Act, 1994, hence the refund claims have to be considered and decided as per the provisions of said section. The refund claims have been filed beyond the period of limitation as prescribed by the Section 11B, the refund claims are barred by limitation. Unjust enrichment - HELD THAT - In the present case that the appellants have paid the service tax as per self assessment made by them and have filed ST-3 return accordingly. They have not filed any appeal to Commissioner (Appeals) for modification of the said assessment order claiming the benefit of exemption. They have claimed the benefit of exemption by way of these refunds claim - in case of in case of VIAVI SOLUTIONS INDIA PVT. LTD. VERSUS COMMISSIONER, CCE ST, GURGAON-I 2021 (10) TMI 1300 - CESTAT CHANDIGARH referred the matter to Hon ble President for referring the issue to larger bench for resolution of difference in opinion expressed by the two bench. Since this goes to the root of the matter, this matter also be referred to Hon ble President for referring the matter to larger bench with following question of law Whether refund claim of service tax is maintainable in the absence of any challenge or assessment or self-assessment in appeal or not?

Summary

Issues Involved:
1. Maintainability of the Refund Claim
2. Limitation under Section 11B
3. Unjust Enrichment

Issue-wise Detailed Analysis:

1. Maintainability of the Refund Claim:

The appellants paid service tax on services provided to HAFED/FCI, which they later claimed were exempt under the negative list. The refund claim was based on a legal opinion obtained by FCI, not on any determination by an authority, tribunal, or court. The appellants self-assessed their tax liability and reflected it in their ST-3 returns without seeking modification of the self-assessed return through an appeal to the Commissioner (Appeals). The Supreme Court in the ITC case held that without modification of the self-assessment in an appeal, a refund claim is not maintainable. The Tribunal concluded that the refund claim filed by the appellants based on legal opinion or tribunal decisions is not maintainable.

2. Limitation under Section 11B:

The appellants argued that the duty was mistakenly deposited and that Section 11-B's provisions should not apply, citing various case laws. However, the Tribunal noted that the Supreme Court in the Porcelain Electrical Mfg Co case held that if a refund claim is made under Section 11B, the period of limitation prescribed therein applies. The Tribunal referred to the larger bench decision in Veer Overseas Ltd., which held that refund claims must be filed within the period of limitation specified in Section 11B. The Tribunal disagreed with the Delhi Bench's decision in Oriental Insurance Co, which was contrary to Supreme Court rulings. Consequently, the Tribunal concluded that the refund claims were barred by limitation as they were filed beyond the specified period.

3. Unjust Enrichment:

The appellants admitted to collecting service tax from the service recipients and passing on the burden. They relied on an order of the Assistant Commissioner in a different case involving FCI to argue against unjust enrichment. However, the Tribunal noted that the findings in the FCI case do not establish that the appellants did not pass on the burden of tax. The Tribunal referred to the Supreme Court's rulings in Allied Photographics and Addison and Co Ltd., which emphasize that the accounts of the manufacturer and buyer are distinct and that the claimant must prove that the burden of duty was not passed on to any other person. The Tribunal concluded that the appellants did not establish that they had not passed on the burden of the tax, thus failing to overcome the bar of unjust enrichment.

Conclusion:

The Tribunal dismissed the appeals, holding that the refund claims were not maintainable without modification of the self-assessed returns, were barred by limitation under Section 11B, and were hit by the doctrine of unjust enrichment as the appellants had passed on the burden of the tax to the service recipients.