2025 (1) TMI 545 - AT - Service Tax

Refund of service tax paid on educational course imparted - refund rejected on the ground that course curriculum for obtaining qualification was not recognized by the Open University for the relevant period as they entered into an agreement only on 30.03.2015 after which certificates were issued but dues were already collected from the students - doctrine of unjust adjustment - time limitation. HELD THAT - This refund application pertains to a period for which there was no formal recognition granted to the assessee by the open university (YCMOU) prior to 31.03.2015 and the letter dated 20.06.2016 tried to provide a post facto approval to the prior period which is not in conformity to sub section 143 of 66D of the Finance Act for the reason that sample copy of certain mark sheets and certificates issued in 2015 by the Registrar, YCMOU as filed at page 57-58 of the appeal paper book would go to show that the batch was enrolled in 2014, though certificates were issued in 2016 which is admittedly after the grant of recognition. Going by the strict interpretation of clause (l)(ii) of section 66D, if services were provided as part of curriculum for obtaining qualification recognized by law, appellant would be entitled to avail the benefit of negative list and if the services that covered both pre and post recognition were offered after receipt of necessary recognition from the Open University, it would have been entitled to receive refund of the tax paid on providing educational services as part of curriculum only when the appellant had not collected any Service Tax from its students for that period - having regard to the fact that certificates to those students for batch of July 2014 were all issued in 2016 in the month of June, it is opined that while the entire curriculum was being imparted, appellant had not received any recognition from any university to cover itself under exemption under clause (l)(ii) of the section 66D from the Finance Act, let alone its other dispute concerning filing of refund application after the period limitation. Conclusion - The rejection of the refund claim confirmed, holding that the courses were not exempt from service tax for the relevant period, the refund claim was barred by limitation, and the appellant failed to prove non-passing of tax incidence. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in this judgment include:

Whether the educational courses provided by the appellant were exempt from service tax under clause (l)(ii) of the negative list in section 66D of the Finance Act, 1994, during the period from April 2014 to September 2014.
Whether the appellant's refund claim is valid considering the alleged post facto recognition by Yashwantrao Chavan Maharashtra Open University (YCMOU) and the doctrine of unjust enrichment.
Whether the refund application was filed within the prescribed limitation period.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Exemption from Service Tax

Relevant Legal Framework and Precedents: Clause (l)(ii) of section 66D of the Finance Act, 1994, exempts service tax on "Education as part of a curriculum for obtaining qualification" recognized by any law. The appellant argued that their courses were exempt under this clause.
Court's Interpretation and Reasoning: The Tribunal noted that the recognition by YCMOU was granted only after March 31, 2015. The letter dated June 20, 2016, attempting to provide post facto approval, was not considered valid for the period in question.
Key Evidence and Findings: The appellant provided sample mark sheets and certificates issued in 2015, which indicated that the batch was enrolled in 2014. However, these documents were issued after the recognition date.
Application of Law to Facts: The Tribunal applied a strict interpretation of clause (l)(ii) and concluded that the appellant was not entitled to the exemption for the period before formal recognition was granted.
Treatment of Competing Arguments: The appellant's argument that prior recognition was acknowledged by YCMOU was rejected due to lack of formal recognition during the relevant period.
Conclusions: The Tribunal held that the appellant was not eligible for service tax exemption for the period from April 2014 to September 2014.

Issue 2: Validity of Refund Claim and Doctrine of Unjust Enrichment

Relevant Legal Framework and Precedents: The doctrine of unjust enrichment and the burden of proof for non-passing of tax incidence were considered, referencing the decision in M/s. Allied Photographics India Ltd. vs. CCE.
Court's Interpretation and Reasoning: The Tribunal emphasized that the appellant failed to demonstrate that the tax incidence was not passed on to the students, as the fee receipts indicated that fees were inclusive of all taxes.
Key Evidence and Findings: The invoices and fee receipts provided by the appellant showed that service tax was included in the fees collected from students.
Application of Law to Facts: The Tribunal applied the doctrine of unjust enrichment, concluding that the appellant could not claim a refund as the burden of tax was passed onto the students.
Treatment of Competing Arguments: The appellant's claim of non-passing of tax incidence was not substantiated, leading to the rejection of the refund claim.
Conclusions: The Tribunal dismissed the refund claim due to the failure to prove non-passing of tax incidence.

Issue 3: Limitation Period for Refund Application

Relevant Legal Framework and Precedents: The limitation period for filing a refund claim is one year from the date of complete submission of the refund application.
Court's Interpretation and Reasoning: The Tribunal found that the hard copy of the refund application was filed on June 8, 2015, beyond the limitation period, as opposed to the appellant's claim of an online application filed in April 2015.
Key Evidence and Findings: The Tribunal relied on the date of submission of the hard copy and relevant documents to determine the filing date.
Application of Law to Facts: The Tribunal strictly applied the limitation period, finding the refund application time-barred.
Treatment of Competing Arguments: The appellant's contention regarding the online filing was not substantiated with evidence.
Conclusions: The refund application was dismissed as time-barred.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "While the entire curriculum was being imparted, appellant had not received any recognition from any university to cover itself under exemption under clause (l)(ii) of the section 66D from the Finance Act."
Core Principles Established: The necessity of formal recognition for service tax exemption and the strict application of the doctrine of unjust enrichment were reinforced.
Final Determinations on Each Issue: The Tribunal confirmed the rejection of the refund claim, holding that the courses were not exempt from service tax for the relevant period, the refund claim was barred by limitation, and the appellant failed to prove non-passing of tax incidence.

The appeal was dismissed, and the order of the Commissioner (Appeals) was confirmed.

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