2024 (5) TMI 623 - AT - Service Tax

Refund claim - applicability of principle of unjust enrichment - CA has certified that amount of refund claim is not passed on to any third party and that the said amount shown as receivable - refund on the ground of amalgamation of the appellant company with transferor company M/s. Intas Pharmaceuticals (a partnership firm) - service to self or not - HELD THAT - The learned counsel is not completely agreed upon for the reason that as per the provision of Section 11 B the incidence of the refund amount should not be passed on to any other person therefore even though the service is provided to self but if the incidence of service tax passed on in any form the same will be hit by unjust enrichment. However in the present case it is not only the service provided to self but as per the chartered accountant certificate it was certified that the incidence of service tax has not been passed on and the same was shownreceivable in the books of account. However on the query from the bench the learned counsel was unable to show the books of account - the claim of the appellant that the amount is shown as receivable can be conclusively established only on the verification of books of account. Therefore the appellant to produce the books of account before the adjudicating authority the adjudicating authority on the basis of amount being shown as receivable must sanction the refund. The contention of the learned Commissioner (Appeals) that the amount of service tax might have been included in the cost of goods of Dehradun Unit and by that way the same might have been passed on cannot be agreed upon. It is clear that once the payment is shown as receivable it is impossible to book the same amount as expenditure. It will not be acceptable even under the Income Tax Act therefore only on the basis of the fact that the amount of service tax shown as receivable it is sufficient proof that the incidence of service tax has not been passed on and the refund can be concluded on this basis. The impugned order is set aside - appeal allowed by way of remand to the Adjudicating Authority to decide a fresh after verification of books of accounts and the entry of receivable shown therein.

Summary

Issues involved:
The judgment addresses the issue of whether the principle of unjust enrichment applies to a refund claim when the service is rendered to self due to amalgamation of companies, and whether the burden of service tax has been passed on to any third party.

Issue 1: Unjust Enrichment in Refund Claim:
The appellant company filed a refund claim post-amalgamation with another company, asserting that services rendered were to self and not taxable. The Assistant Commissioner approved the claim, but the Commissioner set it aside, suspecting that the service tax amount might have been included in the cost of goods. The appellant argued that the service tax burden was not passed on, supported by a chartered accountant certificate. The Tribunal held that the burden of proof lies with the appellant to show the amount as receivable in the books of account for refund approval.

Issue 2: Burden of Service Tax in Amalgamation:
The appellant contended that post-amalgamation, services were rendered to self, and hence, the burden cannot be passed on to any third party. They cited relevant judgments to support their claim. The Tribunal agreed that if the amount is shown as receivable, it indicates the burden was not passed on, rejecting the Commissioner's argument that the tax amount might have influenced the cost of goods. The Tribunal remanded the case for verification of books of accounts before sanctioning the refund.

Separate Judgement:
The Tribunal, comprising HON'BLE MEMBER (JUDICIAL) MR. RAMESH NAIR and HON'BLE MEMBER (TECHNICAL) MR. RAJU, allowed the appeal, setting aside the impugned order. They directed the Adjudicating Authority to verify the books of accounts to establish that the amount was shown as receivable, ensuring the refund approval process. The appellant was granted a fair hearing and opportunity to present their books of account.