2024 (5) TMI 1221 - AT - Service Tax

Refund of Service tax - rejection on the ground that filing of refund claim by the branches instead of the head office - Unjust enrichment - Government Works Contracts - challans not mentioned in ST-3 returns - compliance with Section 102 of the Act - construction services to various Departments of U.P. Government - HELD THAT - We find that since this appeal is arising out from the bunch of appeal filed by the revenue against the same Order-in-Appeal dated 31.01.2019 decided by the Tribunal vide Final Orde 2019 (9) TMI 1395 - CESTAT ALLAHABAD held that The provisions of Rule 102 were specifically introduced in the Finance Act for refund of the service tax so paid which was actually paid on account of inadvertant withdrawing of exemption. The contracts with the U.P. Government were inclusive of all taxes thus not attracting the provisions of unjust enrichment. Appeal dismissed - decided against Revenue. Appeal is dismissed.

Summary

Issues:
1. Refund claims rejection based on payment by head office.
2. Challans not mentioned in ST-3 returns of branches.
3. Unjust enrichment regarding service tax liability.
4. Refund claim satisfaction of conditions under section 102 of the Act.
5. Appeal against the rejection of refund claims on the ground of unjust enrichment.

Analysis:
The judgment involves multiple issues related to the rejection of refund claims by the Revenue and subsequent appeals. The first issue pertains to the rejection of refund claims based on the argument that the service tax was paid by the head office, not the individual branches. The Commissioner (Appeals) held that the filing of refund claims by branches instead of the head office was a minor technical infraction and did not warrant denial of the refund claims. The centralized registration of the corporation further supported this argument, leading to the allowance of the appeals.

Regarding the second issue of challans not being mentioned in the ST-3 returns of the branches, it was argued that the total tax liability was discharged by the head office, and the details of challans were reflected in the ST-3 returns of the head office. The submission of the copy of ST-3 returns of the head office containing the challan details supported the claim, and the absence of a requirement for original contracts further strengthened the case for allowing the refund claims.

The issue of unjust enrichment was also addressed, with the appellants arguing that the service tax liability was discharged from the government organization's fund corpus, and no invoices or bills were issued in this regard. The exemption of service tax on work orders issued before 01.04.2015 was highlighted, indicating that the appellants had borne the incidence of service tax and had not passed it on. The balance sheet showing the claimed amount of service tax paid as receivables further supported the argument against unjust enrichment.

Moreover, the satisfaction of conditions under section 102 of the Act was crucial in determining the validity of the refund claims. The appellant provided a certified chart showing the work orders and challan details, meeting the stipulated conditions for refund. The orders granting refunds on the same issue by Central Excise Divisions Sitapur and Bareilly further supported the appellant's case, leading to the setting aside of the impugned orders and allowing the appeals.

In a subsequent appeal, the Tribunal upheld the order-in-appeal, emphasizing that the contracts with the U.P. Government were inclusive of all taxes, thus not attracting the provisions of unjust enrichment. The introduction of Rule 102 in the Finance Act for refund of service tax paid due to the withdrawal of exemption was crucial in determining the validity of the refund claims, ultimately leading to the rejection of the Revenue's appeals.

Overall, the judgment addresses various legal and technical aspects concerning the rejection of refund claims, unjust enrichment, and compliance with statutory provisions, resulting in the dismissal of the appeal against the rejection of refund claims based on the ground of unjust enrichment.