TRANSFER OF REFUND TO CONSUMER WELFARE FUND

[Mr. M. GOVINDARAJAN]

     Sec. 12C of the Central Excise Act, 1944 provides for the establishment of Consumer Welfare fund by the Central Government in which-

The amount of duty of excise referred to in Sec. 11B(2) or Sec.11C (2) or Sec. 11D (2);

The amount of duty of customs referred to in Sec. 27(2) or Sec. 28A (2) or Sec. 28B (2);

Any income from investment of the amount credited to the Fund and any other monies received by the Central Government for the purpose of this Fund;

The surplus amount referred to in Sec.73 (A) (6) of the Finance Act, 1994.

In this article the main discussion is whether the refund may be transferred to consumer welfare fund with the decided case law in 'Multimantech International Private Ltd., V. Commissioner of Service Tax, Ahamedabad' - 2008 -TMI - 31093 - CESTAT AHMEDABAD

     In this case the appellant was holding service tax registration for providing 'Consulting Engineering' service.  The appellant has filed a refund claim for Rs.3,11,234/- on the ground that inclusion in the services 'Survey and mapping' was not covered under the service tax net till inclusion in the budget 2005-06 whereas they have wrongly deposited service tax towards such service for the period from May 2004 to September 2004.  The appellant was providing services to M/s GAIL and as per the intent letter of M/s GAIL the contract value is inclusive of all taxes, duties etc.,

     In response to the application for refund a show cause notice was issued by the Department whereby the appellant was asked to show cause as to why the said amount should not be credited to the Consumer Welfare Fund.  The show cause notice was decided whereby the refund was sanctioned and since the claim was hit by unjust enrichment, the said amount was credited to the Consumer Welfare Fund.   The Commissioner (Appeals) upheld the order of the original Adjudicating Authority. The Commissioner (Appeals) has relied upon the Hon'ble Punjab & Haryana High Court's decision in the case of M/s JCT Limited - 2006 (202) ELT 773 (P&H) wherein it was held that when price is inclusive of taxes, it would mean that all taxes have been collected, unless proved otherwise through specific evidence.

     Aggrieved against the order of Commissioner (Appeals), the appellant filed this present appeal before the tribunal. The appellant submitted the following contentions:

The contract with M/s GAIL was inclusive of taxes and duties and it does not mean that the service tax was recovered on exempted services provided to the client;

That they have not charged service tax separately in the invoices raised, which show that no service tax was recovered from their clients;

The certificate of Chartered Accountant shows that service tax was not recovered from their clients.

The appellant relied on the following decisions of the tribunal:

Ø      M/s Thales-E-Transaction CGA V. Commissioner of Central Excise, New Delhi - 2006 -TMI - 408 - Appellate Tribunal, New Delhi

Ø      M/s CIMMCO Ltd., V. Commissioner of Central Excise, Jaipur, 1999 (107) ELT 246 (Tri.);

Ø      M/s AL Steel Industries V. Commissioner of Central Excise, Cochin - 2008 (161) ELT 628 (Tri. Bang).

The Department reiterated the findings of the original Adjudicating Authority and the Commissioner (Appeals). 

     The tribunal heard both sides. It observed as follows:

v     Admittedly, the contract entered by the appellant w with M/s GAIL is inclusive of all taxes, duties WCT etc.,  As during the relevant period, the appellant was paying service tax in question, it is reasonable to presume that the same was taken into account for quoting the contract price.   As such it is now for the assessee to establish that such service tax, as paid by the assessee, was not part of the total service contract and does not stand recovered by them from their customers;

v     When the value of the contract is inclusive of all taxes and the appellant was paying the tax in question, the same leads to inevitable conclusion that the contract value was inclusive of the above service tax also;

v     In 'M/s Thales-E-Transaction CGA' (supra) the court found that the case was remanded after observing that if the appellants are able to produce evidence that they have not passed on incidence of service tax to their clients than they are eligible for refund.  It is not that the tribunal accepted the assessee's stand that the fact of contract value being inclusive of all taxes would show that the service tax was not included;

v      In 'CIMMCO Ltd.,'(supra) the tribunal held that the condition in word order that rates inclusive of duties, taxes… does not mean that excise duty is covered by the same, after observing the appellant has been taking a stand from the beginning as to non excisability of the goods.   The tribunal also referred to the various clauses of the contract and found that there was more elaborate subsequent clause indicating that no expression mentioned about Central Excise duty whereas the same specifically referred to service tax.   It was in these circumstances that the tribunal observed that the contract did not include excise duty.   The tribunal observed that the same is not the case in the present appeal and there is no separate reference to different types of cases;

v     In 'AL Steel Industries' (supra) the tribunal held that the contract value did not include excise duty by referring to the various clauses of the contract and the tender floated by Electricity Board, which provided for quoting prices with split up details of ex-work price, packing and forwarding, excise duty's ales tax, freight etc.,   As such from the price factory placed before the tribunal, it was concluded that the appellant's claim for excise duty was not accepted by the Electricity Board and the price approved did not include any provision for excise duty.   It was in these circumstances, the tribunal held that the contract price was without excise duty.  The tribunal held that neither of the judgments relied upon by the appellant applies to the facts of the present case;

v     The appellant has not shown as to how the ratio of the above decisions are applicable to their case;

v     The appellant only referred to the Chartered Accountant's certificate; The said certificate is only to the effect that the appellant has not shown service tax payments made by them.

The tribunal held that as rightly concluded by the appellate authority the certificate of the Chartered Accountant is merely a statement that invoices do not show the service tax separately.  There is nothing in the said certificate to show or to establish that such tax paid by the appellant has not been collected from the buyers.

     In view of the above the tribunal upheld the order of the Commissioner (Appeals).