2023 (2) TMI 11 - AT - Service Tax

Refund claim - Principles of unjust enrichment - whether the amount of refund has been rightly credited to Consumer Welfare Fund on the ground of unjust enrichment? - period October 2013 to March 2016 - HELD THAT - Admittedly, appellant have not charged service tax under dispute in their invoices. Further, admittedly these amounts were paid under protest at the investigation stage and thereafter, the show cause notice was issued. In these circumstances, it is held that only by way of bit in profit and loss account, it does not amount to passing of the burden to a third person or the customer indirectly. An assessee is always at liberty to right back the expenditure debited in profit and loss account by way of adjustment in their capital account. - Refund allowed. Non-appearance of counsel / Chartered accountant in proper dress before the tribunal - Cost of Rs. 2000/- imposed.

Summary

Issues:
1. Whether the amount of refund has been rightly credited to Consumer Welfare Fund on the ground of unjust enrichment.

Analysis:
The appellant, engaged in the hotel business, deposited service tax under protest following an audit objection. The subsequent show cause notice was adjudicated in favor of the appellant, who then applied for a refund. The Assistant Commissioner granted the refund, noting that the amount was deposited under protest, and there was no time bar. However, the revenue appealed on the grounds of unjust enrichment. The Commissioner (Appeals) observed that since the appellant debited the amount in their profit and loss account, it indirectly passed on the incidence, thus directing the amount to be credited to the Consumer Welfare Fund.

The appellant challenged this decision before the Tribunal, arguing that payment was made under protest, and there was no evidence of passing on the amount to customers. The appellant contended that merely debiting the amount in the profit and loss account does not establish passing on the duty liability. The appellant highlighted the presumption under Section 12B of the Central Excise Act, emphasizing the requirement of charging the duty or tax in the invoice to attract the presumption.

The Tribunal analyzed the facts and held that the appellant did not charge the disputed service tax in their invoices and paid the amount under protest before the issuance of the show cause notice. The Tribunal concluded that debiting the amount in the profit and loss account did not amount to indirect passing of the burden to customers. It emphasized that an assessee could adjust such expenditures in their capital account. Consequently, the Tribunal allowed the appeal, setting aside the Order-in-Appeal and granting the appellant consequential benefits.

Additionally, the Tribunal imposed a cost of Rs. 2,000 on the appellant's Chartered Accountant for appearing improperly dressed, directing the payment to be made to the 'Prime Minister Cares Fund' within 15 days, with a compliance report to be filed before the Tribunal's Administrative Officer.