2009 (11) TMI 345 - AT - Service Tax

Refund period of limitation - on advice of the officers, the appellant deposited a sum of Rs. 3,00,497/- on 17-8-2004 towards Service tax liability alleged to be payable by them on the commission amount received by them for the period from 1-7-03 to 31-3-04 under the category of Business Auxiliary Service. - . The original authority side order dated 26-3-2007 dropped the proceedings initiated in pursuance of the notice dated 4-11-2004. Consequently, the appellant preferred refund claim on 25-5-07 of the amount deposited by them on 17-8-2004 and the same was sanctioned by the original authority on 22-8-07. After issuing the show cause notice dated 7-8-2007, the Commissioner by the impugned order dated 19-2-09 set aside the order of the original authority sanctioning refund claim and rejected the refund of Ps. 3,00,497/-. Held that - the refund claim has been filed within stipulated time. It is a case where at the time of rendering service and receiving service charges the appellants have not included the Service tax amount in the invoices. The payment has been made much later in point of time only as a deposit. Show cause notice by the Department also treated the amount only as deposit refund allowed

Summary

Issues:
Appeal against revision order setting aside refund sanction. Validity of refund claim time limit and unjust enrichment.

Analysis:
1. The appeal was filed against a revision order by the Commissioner that set aside the refund sanction of Rs. 3,00,497 by the original authority. The appellant had deposited this amount towards Service tax liability under Business Auxiliary Service, which was later dropped by the original authority.
2. The appellant argued that the refund claim was made within the stipulated time limit and was not barred by unjust enrichment. They contended that the amount deposited was only a deposit made under protest, as acknowledged by the Department in the show cause notice.
3. The Department, represented by the SDR, claimed that the appellant failed to prove that the amount was paid under protest and that they did not pass on the burden to their service recipient.
4. The Member (T) carefully considered both sides' submissions and noted that the amount was paid after the service charges were collected, and the original authority had ruled the appellant was not liable to pay Service tax. The Department itself treated the amount as a deposit in the show cause notice.
5. The Member held that since the proceedings were dropped, the deposited amount was refundable. The refund claim was filed within the stipulated time, and the appellant had not included the Service tax amount in their invoices at the time of service provision, supporting the argument against unjust enrichment.
6. Consequently, the Member found the grounds adopted by the Commissioner invalid and set aside the Commissioner's order, restoring the original authority's sanction of the refund claim.
7. The appeal was allowed in favor of the appellant, and the order of the Commissioner was deemed unsustainable, reinstating the refund sanction by the original authority.