2022 (2) TMI 1008 - AT - Service Tax

Refund of service tax - rejection of refund being barred by limitation as well as being hit by unjust enrichment - HELD THAT - The appellant made an application for refund after passing of the Final Order of CESTAT, Chennai, which is dated 13.06.2018 and the application for refund is dated 28.02.2019. Therefore, there are no reason as to how the said refund claim is hit by limitation. Section 11B of the Central Excise Act, 1944 prescribes one year within which an application for refund needs to be made and again, which is also qualified under Explanation (B)(ec) to Section 11B ibid. Going, therefore, by the dates, it is found that the appellant s claim is well within the prescribed period of limitation. Unjust enrichment - HELD THAT - It is the case of the appellant that the Duty element was not passed on to its customers, in support of which they had placed reliance on documents like the certificate of Chartered Accountant, Income Tax returns, P L Account, etc. This fact, though has been considered by the Adjudicating Authority, yet the same is ignored and no contrary finding is given as to the veracity or otherwise of the same, by any of the authorities below - there are also sufficient force in the contentions of the Learned Advocate for the appellant that even the invoices did not reflect the element of Service Tax which is charged from its customers, which were also available with the Department. The Revenue has not pointed out any defects in the above documents and there is also no discussion as to the genuineness or otherwise of the same. The allegation of unjust enrichment has not been proved by the Revenue. On the other hand, in the absence of any contrary findings on the documents, the appellant has been able to successfully prove that the tax incidence has not been passed on to its customers - the rejection of refund is held to be vague and unjustifiable - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Rejection of refund claim as barred by limitation and unjust enrichment.

Analysis:
1. Limitation Issue:
The appellant's refund claim was rejected on the grounds of being time-barred and hit by unjust enrichment. However, the Member (Judicial) found that the claim was made within the prescribed period as per Section 11B of the Central Excise Act, 1944. The application for refund was filed after the Final Order of CESTAT, Chennai, and within the stipulated time frame. The Member concluded that the claim was well within the limitation period, thereby dismissing the objection raised on this ground.

2. Coverage of Service Tax Issue:
The impugned order contended that the Final Order of CESTAT did not cover the Service Tax paid for the earlier period. The Member disagreed with this finding, stating that the Tribunal had previously determined that there was no tax liability before a specific date. Consequently, the objection regarding the coverage of Service Tax for the earlier period was set aside, as it lacked substantial justification.

3. Unjust Enrichment Issue:
The appellant argued that the Duty element was not transferred to its customers, providing evidence such as a certificate from a Chartered Accountant, Income Tax returns, and P&L Account. Despite the consideration of this evidence by the Adjudicating Authority, no conclusive findings were made on its validity. The Member noted that the invoices also did not reflect the charged Service Tax, and the Revenue failed to identify any flaws in the presented documents. Consequently, the allegation of unjust enrichment was deemed unproven, and the appellant successfully demonstrated that the tax burden was not passed on to its customers. As a result, the rejection of the refund claim was deemed unjustifiable, leading to the setting aside of the impugned order.

4. Conclusion:
In light of the above analysis, the appeal was allowed with consequential benefits as per the law. The Member pronounced the order in open court on 04.02.2022, overturning the rejection of the refund claim based on limitation and unjust enrichment issues.