2024 (6) TMI 87 - AT - Service Tax

Principles of unjust enrichment - Refund claim - Whether the refund should be credited to the Consumer Welfare Fund due to unjust enrichment? - HELD THAT - The letter dated 19.08.2014 that was sent by the appellant to the Assistant/Deputy Commissioner of Service Tax merely states that the appellant is entitled to refund of Rs. 1,23,70,024/- in terms of the order passed by the Tribunal. There is no averment, much less any proof in support thereof, that the appellant would not unjustly enrich itself if the amount is refunded - The appellant made no reference to the Credit Note that contained a stipulation that the amount would actually be paid to Unitech and Vatika only when the department refunds the amount to the appellant. The certificate does not even specify why the appellant would not unjustly enriched. In any view of the matter, even if it is assumed that such credit was done by the appellant in the books of accounts in favour of Unitech and Vatika, there is nothing on the record even in this appeal to substantiate that Unitech and Vatika had not collected service tax from the allottees to whom they had allotted the flats. This is what prevailed upon the Assistant/Deputy Commissioner to hold that refund should be credited in the Consumer Welfare Fund. Once such a finding was recorded by the Assistant Commissioner, it was incumbent upon the appellant to have at least filed sufficient evidence before the Commissioner (Appeals) to substantiate that these two builders had not recovered service tax from the allottees. There is no error in the Assistant Commissioner assuming, in the absence of any evidence led by the appellant, that the two builders had recovered service tax from the allottees of the flats and so they would be unjustly enriched even if the amount of service tax was paid by the appellant to the two builders after refund from the department. Thus, it is a clear case where the amount of service tax recovered by the appellant from Unitech and Vatika was not actually paid to Unitech and Vatika and only an assurance was given to them that the amount would be paid upon receipt of the refund amount from the Government. In any view of the matter, even if it is assumed that there was a credit by the appellant in favour of Unitech and Vatika, there is nothing on the record to indicate that Unitech and Vatika had not recovered service tax from the allottees - In the present case, the Tribunal while allowing the appeal filed by the appellant had made it absolutely clear that the appellant would be entitled to refund only if the appellant established that it would not be unjustly enriched. This order of the Tribunal has attained finality. In such circumstances, it is not open to the appellant to not now contend that the principles of unjust enrichment should not have been examined by the Adjudicating Authority. There is no error in the order passed by the Commissioner (Appeals) - Appeal dismissed.

Summary

Issues Involved:
1. Whether the appellant is entitled to a refund of Rs. 1,23,70,024/-.
2. Whether the refund should be credited to the Consumer Welfare Fund due to unjust enrichment.

Summary:

1. Entitlement to Refund:
The appellant, engaged in the construction business, was awarded contracts by Unitech and Vatika, who supplied cement and steel free of cost. The appellant raised supplementary invoices and charged service tax as a precaution, which was paid by Unitech and Vatika and deposited with the service tax department. A show cause notice was issued, and the Commissioner of Central Excise confirmed the demand. The Tribunal allowed the appeal and quashed the order, entitling the appellant to a refund subject to verification of unjust enrichment.

2. Credit to Consumer Welfare Fund:
The Assistant Commissioner sanctioned the refund but credited it to the Consumer Welfare Fund, citing unjust enrichment. The Commissioner (Appeals) upheld this decision, stating that the appellant had collected service tax from Unitech and Vatika and there was no evidence that the burden was not passed on to the final consumers. The appellant's issuance of a Credit Note was not sufficient to prove that the burden was not passed on.

3. Verification of Unjust Enrichment:
The Tribunal's order required the appellant to establish that the refund would not result in unjust enrichment. The appellant failed to provide sufficient evidence to substantiate that Unitech and Vatika had not recovered service tax from the allottees of the flats. The Assistant Commissioner and the Commissioner (Appeals) assumed that the builders had recovered service tax from the allottees, leading to unjust enrichment if the refund was granted to the appellant.

4. Reliance on Precedents:
The appellant's reliance on the Supreme Court's decision in Sunrays Engineers Pvt Ltd and the Tribunal's decision in M/s Jalan Con Cast Ltd was not applicable as the appellant did not provide adequate evidence to support their claim.

Conclusion:
The appeal was dismissed, and the order to credit the refund to the Consumer Welfare Fund was upheld due to the appellant's failure to prove that the refund would not result in unjust enrichment.