2024 (4) TMI 560 - HC - Service Tax

Refund of service tax paid - time limitation - Business Auxiliary Service or not - rejection of refund claim on the ground that the petitioner had filed the said application after one year, the statutory period prescribed under Section 11B of the Central Excise Act, 1944 - principles of unjust enrichment. Unjust Enrichment - HELD THAT - The Revenue took up this matter before the CESTAT against the order passed in Ext. P2 by the Commissioner (Appeals). The Tribunal vide the order dated 19.01.2018 in Ext. P3, remanded the matter back to the original authority to examine the record of the petitioner afresh and pass a fresh order. On remand, the 2nd respondent/original authority had considered the issue afresh and issued order dated 25.03.2021 in Ext. P5. The 2nd respondent had found that the payment of Rs. 15,66,169/- was made under protest. However, the petitioner did not produce any convincing document to prove that the tax paid by him of Rs. 15,66,169/- had not been passed on to the consumer of services ie., the respective distilleries and therefore, the petitioner had been held not to be entitled for claiming refund in absence of the evidence to prove that the petitioner had not passed on the tax liability on the distilleries, and he had paid an amount of Rs. 15,6,169/- from the own pocket. Time Limitation - 2nd respondent found that out of the said amount, Rs. 2,78,100/- was paid by the petitioner on 04.01.2007 and the application was made after one year, which would be barred under Section 11B of the Central Excise Act, 1944 - HELD THAT - The question is of evidence and not on of the law. Whether the petitioner had passed on the tax liability on the distilleries, the consumers of the services of the petitioner is a matter of fact and evidence, and this Court cannot go into this question in exercise of its jurisdiction under Article 227 of the Constitution of India. In respect of the amount of Rs. 2,78,100/-, the original authority had categorically held that the application had been filed after one year of prescribed limitation period, and in respect of the other amount, he had failed to prove that the said tax liability had not been passed on to the consumers of the petitioner service. Therefore, this Court cannot examine the issue, which is only a question of fact and evidence and not of the law. This Court find no substance in this writ petition. Thus, the writ petition is hereby dismissed.

Summary

Issues involved: Service tax liability, refund claim, unjust enrichment, interpretation of Section 11B of the Central Excise Act, 1944.

Service tax liability: The petitioner, engaged in blending and bottling of Indian Made Foreign Liquor, was assessed for service tax under the category of "Business Auxiliary Service." Subsequently, a clarification was issued stating that the services provided by the petitioner were not taxable under the Finance Act, 1994.

Refund claim and unjust enrichment: The petitioner sought a refund of the service tax paid, which was rejected on the grounds of filing the application after the prescribed statutory period under Section 11B of the Central Excise Act, 1944, and the concept of unjust enrichment. The Commissioner (Appeals) modified the order, granting a partial refund, which was challenged by the Revenue before the CESTAT.

Interpretation of Section 11B: The original authority, upon remand from the Tribunal, found that the petitioner failed to provide convincing evidence that the tax liability had not been passed on to the consumers. The Court emphasized that the issue of whether the tax liability was passed on is a matter of fact and evidence, not a question of law. The Court dismissed the writ petition, stating that it cannot examine factual issues under Article 227 of the Constitution of India.

This judgment highlights the importance of providing concrete evidence in refund claims and the distinction between matters of fact and law in judicial review.