2022 (9) TMI 744 - AT - Service Tax

Refund of Service Tax - unjust enrichment - seeking refund to customers - rejection of service tax on the ground of time limitation and unjust enrichment - section 11B of the Central Excise Act 1944 as made applicable by section 83 of the Finance Act 1994 to Service Tax matters - HELD THAT - The impugned order has partly sanctioned the refund and credited it to the consumer welfare fund and partly rejected on the ground of time bar. It is true that the law laid down by the Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE KOLKATA -IV 2019 (9) TMI 802 - SUPREME COURT was that no refund to be sanctioned at all unless the assessments (including self assessments) are first assailed before the Commissioner (Appeals) and modified. However the sanction of refund by the Commissioner (Appeals) has not been assailed by the Revenue either by an appeal or by a separate memorandum of cross objections. The refund claim can be made by the person who paid the excise duty or from whom the excise duty is collected and who has not passed on the incidence to any other person. Since these provisions are made applicable to the service tax by virtue of section 83 of the Finance Act 1994 refund can also be claimed of service tax by the person who has either paid the service tax or the person from whom the service tax has been collected provided such person has not passed on the incidence to any other person. After examining the refund claim if it is found admissible and if it is found to have been filed within time the refund so sanctioned has to be credited to the consumer welfare fund. However if the claimant proves that it has not passed on the burden to any other person then it shall be paid to the claimant - there is no provision whatsoever in section 11B by which one person who has paid the service tax and who has also passed on the burden to others to file refund claim and request that the refund may be sanctioned and given to its customers. The scheme of the law is that once the applicant has passed on the burden of service tax to anybody the amount has to be credited to the consumer welfare fund and not paid. The part of the refund claim was filed beyond a period of one year and hence was found to be inadmissible and was rejected by the Commissioner (Appeals) - there are no infirmity in the impugned order - appeal dismissed.

Summary

Issues Involved:
1. Non-appearance of the appellant and repeated adjournments.
2. Eligibility of the refund claim under section 11B of the Central Excise Act, 1944.
3. Applicability of the doctrine of unjust enrichment.
4. Time-barred refund claims.
5. Crediting of the refund amount to the consumer welfare fund.
6. Self-assessment and modification of assessment for refund claims.

Detailed Analysis:

1. Non-appearance of the appellant and repeated adjournments:
The matter was called for hearing, but no one appeared on behalf of the appellant. A letter from the appellant's counsel requested an adjournment due to short notice. The tribunal noted multiple previous adjournments and proceeded to decide the matter based on available records and submissions by the Revenue's Authorized Representative.

2. Eligibility of the refund claim under section 11B of the Central Excise Act, 1944:
The appellant sought a refund of Rs.1,04,66,929/- on the ground that the service tax paid did not fall within the taxable services per CBEC Circular dated 29.01.2009. The appellant requested the refund be paid directly to its customers. The show cause notice proposed rejecting the refund claim under section 11B, which was upheld by the Assistant Commissioner.

3. Applicability of the doctrine of unjust enrichment:
The appellant argued that the doctrine of unjust enrichment was not applicable as the incidence of tax was not passed on to customers. However, it was found that the appellant had collected the service tax from customers, and thus, the burden of tax was passed on, making the doctrine applicable.

4. Time-barred refund claims:
The Commissioner (Appeals) found that a portion of the refund claim amounting to Rs.10,52,220/- was within the one-year limitation period and eligible for refund, while the remaining claim was time-barred. The relevant date for filing the refund claim was the date of payment of service tax, not the due date for filing returns.

5. Crediting of the refund amount to the consumer welfare fund:
The Commissioner (Appeals) directed the eligible refund amount to be credited to the consumer welfare fund under section 12C of the Central Excise Act, 1944, as the appellant had passed on the tax burden to customers. The tribunal upheld this decision, noting that the refund must be credited to the consumer welfare fund if the burden of tax is passed on.

6. Self-assessment and modification of assessment for refund claims:
The tribunal referred to the Supreme Court's decision in ITC Ltd vs Commissioner of Customs, which held that refunds could only be sanctioned if they flow from an existing assessment. Any modification to self-assessment must first be challenged before the Commissioner (Appeals). Since the appellant did not challenge the self-assessment, no refund could be sanctioned.

Conclusion:
The tribunal found no infirmity in the impugned order, upheld the Commissioner (Appeals)'s decision, and rejected the appeal. The refund claim was partly time-barred, and the eligible amount was correctly directed to the consumer welfare fund due to the passing on of the tax burden to customers. The appellant's request for refund to be paid directly to customers was against the statutory provisions of section 11B.