2023 (7) TMI 884 - AT - Service Tax

Refund of service tax paid - rejection on the ground that the appellant have not been able to establish that the burden to tax paid has not been passed on to the service recipient - principles of unjust enrichment - HELD THAT - The rejection of the refund claim on the ground of unjust enrichment is improper as per the provisions of Section 11B (2) itself - every determination under section 11 B should first determine the admissibility of the refund claim, and there after examine the applicability of the proviso, i.e. the exception in which the refund amount should be paid to the claimant and if the case is not covered by the exception specified by the proviso, the amount of refund determined has to be credited to the fund. Unjust enrichment - HELD THAT - No ground has been taken by the Revenue in the show cause notice. Even during the course of hearing Authorised Representative appearing for the Revenue was unable to point out any such ground taken in the show cause notice and for production and giving opportunity to the appellant for production of the document to substantiate his claim on not passing the burden to the ultimate service recipient. The Chartered Accountant certificate has been rejected stating that it is only a secondary evidence. In the absence of any such ground in the show cause notice and opportunity to the appellant to substantiate his claim on the ground of unjust enrichment this portion of order cannot survive - no proper examination of any of the document by which appellant would have substantiate his claim for not having passed the burden on the tax paid to the service recipient has been undertaken by either of the authorities. To give fair opportunities to both the sides this matter on this ground needs to be remanded back to the Original Authority. Appeal is allowed by way of remand - Matter is remanded to the Original Authority for a decision within three months from the date of receipt of this order.

Summary

Issues Involved:
1. Admissibility of the refund claim.
2. Application of the doctrine of unjust enrichment.
3. Applicability of the decision in the Mafatlal Industries case.
4. Time-barred nature of the refund claim.

Summary:

1. Admissibility of the Refund Claim:
The appellant sought a refund of Rs. 3,00,887/- for service tax paid on chit fund business from October 3, 2012, to April 30, 2013. The Commissioner (Appeals) rejected the claim, citing the Supreme Court's decision in Mafatlal Industries vs. Union of India, which requires a refund claim to be made by way of a suit or writ petition if the levy is declared unconstitutional. The appellant did not file such a petition.

2. Application of the Doctrine of Unjust Enrichment:
The adjudicating authority rejected the refund claim on the grounds of unjust enrichment, stating that the appellant failed to prove that the tax burden was not passed on to others. The Chartered Accountant certificate provided was deemed insufficient. The Tribunal found this rejection improper, as the issue of unjust enrichment was not raised in the show cause notice, and the appellant was not given an opportunity to substantiate their claim.

3. Applicability of the Decision in the Mafatlal Industries Case:
The Commissioner (Appeals) relied on the Mafatlal Industries case, which states that a person cannot claim a refund based on another person's case without challenging the validity earlier. The Tribunal clarified that the Mafatlal decision does not bar the claim but requires examination for unjust enrichment and admissibility. The Tribunal emphasized that the law laid down by higher judicial authorities must be applied congruently with the facts of the case.

4. Time-Barred Nature of the Refund Claim:
The original authority observed that the refund claim was time-barred as per Section 11B of the Central Excise Act, 1944. The Tribunal noted that at least part of the refund claim (from February 2013 to April 2013) could not be time-barred. The Tribunal directed the original authority to re-examine this aspect.

Conclusion:
The Tribunal remanded the matter back to the original authority for reconsideration within three months, directing a proper examination of the facts, unjust enrichment, and the time-barred nature of the claim. The appeal was allowed by way of remand, and the original authority was instructed to consider the decision of the Hon'ble Apex Court in the ITC case during the remand proceedings.