2010 (4) TMI 391 - AT - Service Tax

Refund- Erroneous payment- the respondent obtained the service Tax registration and paid the Service Tax under the category of Business Auxiliary Services during April, 04 to March, 06. Later on realizing that the service of Auctioneers provided by them was not taxable during the period when they paid tax under category of Business Auxiliary Services , they filed a refund claim on 29-3-2007. It was at the insistence of the department that they paid the tax under Business Auxiliary Services . The service of Auctioneers became taxable only w.e.f. 1-5-2006. A show-cause notice was issued to reject the claim as barred by limitation. Held that- service tax not received from clients as evidence by balance sheet and Chartered Accountant s certificate. Unjust enrichment not applicable. Refund admissible.

Summary

Issues:
1. Liability to pay Service Tax on Auctioneers service prior to 1-5-2006 under 'Business Auxiliary Services'.
2. Entitlement for refund claim of Service Tax paid.
3. Application of the doctrine of unjust enrichment.

Analysis:

Issue 1:
The Tribunal considered whether the respondents were liable to pay Service Tax on Auctioneers service before 1-5-2006 under 'Business Auxiliary Services'. Referring to the case of Karvy Consultants Ltd., the Tribunal concluded that the service became taxable only from 1-5-2006. As there was no change in the entry of 'Business Auxiliary Services', the Service Tax liability for Auctioneer service applied from 1-5-2006.

Issue 2:
Regarding the refund claim, the Revenue argued that it was time-barred and cited relevant cases. However, the Tribunal found that the respondents paid tax voluntarily without protest and had not received the Service Tax from their clients. Citing precedents, the Tribunal held that the bar of limitation did not apply as the Service Tax was not payable by the respondents before 1-5-2006.

Issue 3:
On the doctrine of unjust enrichment, the respondent demonstrated that they paid the Service Tax to the department but had not received it from their clients. Supported by their balance-sheet and a certificate from a Chartered Accountant, the Tribunal concluded that the doctrine of unjust enrichment did not apply in this case.

In conclusion, the Tribunal upheld the impugned order, rejecting the Revenue's appeal on all three issues. The judgment was pronounced on 13-4-2010.