2024 (12) TMI 156 - AT - Service Tax

Refund of service tax paid to a Trust - payment of the amount under mistake of law - rejection of refund claim on the ground of limitation and unjust enrichment. Whether only the Trust was eligible to claim the refund and not an individual who has ultimately paid the tax? - HELD THAT - Section 11B(1) of the CEA 1944, which pertains to the claim for refund of duty and interest, states that any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed. The expression any person is of wide amplitude. The Act thus does not confine a claim of refund only to the person who has collected and deposited the tax in the government coffers. However, section 12B of CEA 1944, contains an important presumption that needs to be overcome before sanction of refund to an applicant. As per section 12B of CEA 1944, the presumption is that the incidence of duty has been passed on to the final buyer. Every person who has paid duty, unless the contrary is proved by him, is deemed to have passed on the full incidence of such duty to the buyer of such goods or consumer of such service - In the impugned case the appellant states that the tax, though illegal, has finally come to be collected from him and the incidence of the tax has come to finally rest with him as being the final consumer. Hence he is eligible for the refund and there is no unjust enrichment involved. It is clear that it is the appellant who has borne the ultimate incidence of the tax, and not the Trust, who is the eligible claimant of the refund and is not barred from claiming the same. Further the question of unjust enrichment also does not arise as the amount has been paid from the appellants own resources and has not been shown to have been passed on. The appeal on this issue hence succeeds. Whether the refund claim is time barred? - HELD THAT - It is found that though this legal issue has been raised by the Ld. AR during the hearing, the impugned order at para 10 states that the letter dated 30/01/2017 of the appellant seeking refund is not barred by limitation of time in terms of section 11B of the Central Excise Act 1944. As the department has not filed any appeal against this finding it has become final. Whether at all the impugned Trust is a body which qualifies for exemption from Service Tax? - HELD THAT - The general principle is that an Appellate Authority should not travel outside the record of the lower authority. The issue involving fact and law could not hence have been examined suo moto at the First Appeal stage. The appellant is eligible for consequential relief as per law - Appeal allowed.

Summary

Issues:
1. Eligibility of an individual to claim a refund of service tax paid to a Trust.
2. Whether the refund claim is time-barred.
3. Qualification of the Trust for exemption from Service Tax.

Analysis:

Issue 1: Eligibility of an individual to claim a refund of service tax paid to a Trust

The appellant paid service tax to a Trust and sought a refund, claiming it was a mistake of law. The Trust did not act on the refund request. The appellant argued that he bore the ultimate incidence of the tax and should be eligible for the refund. The impugned order stated that the appellant had not paid the tax to the government account directly and lacked locus standi to claim a refund. However, the law allows any person who has paid duty to claim a refund, and the appellant demonstrated that he bore the incidence of the tax. The court referred to relevant case law and held that the appellant, not the Trust, was eligible for the refund, and unjust enrichment did not apply as the tax was paid from the appellant's own resources.

Issue 2: Whether the refund claim is time-barred

Although the respondent argued that the refund claim was time-barred, the impugned order found that the appellant's refund request was not barred by limitation. As no appeal was filed against this finding, it was deemed final. Therefore, the refund claim was not time-barred as per Section 11B of the Central Excise Act 1944.

Issue 3: Qualification of the Trust for exemption from Service Tax

The issue of whether the Trust qualified for exemption from Service Tax was not within the scope of the original order or the show cause notice. The appellate authority should not address issues beyond the lower authority's record. Therefore, this issue could not be examined at the first appeal stage.

In conclusion, the appellant was deemed eligible for the refund as he bore the ultimate incidence of the tax, and the refund claim was not time-barred. The issue of the Trust's qualification for exemption from Service Tax was not addressed in the appeal. Consequently, the appeal was successful, and the appellant was entitled to consequential relief as per the law.