2014 (3) TMI 775 - AT - Service Tax

Denial of refund claim - Unjust enrichment - Held that - These facts are on record that service tax amount has been calculated on the sale price on the flats on which service tax was not payable by the appellant, but they paid their own. The appellant has produced certificate from the buyers that they have not paid service tax. Further, it is fact on record that no service tax invoice has been issued pertaining to these transactions. In the absence of these, it cannot be held that service tax has been passed on the buyer of the flat. Therefore, the appellant has passed the bar of unjust enrichment. Accordingly, they are entitled to refund claim. As the service tax is not liable to be payable, therefore provisions of Section 11B of Central Excise Act is not applicable to this case - Decided in favour of assessee.

Summary

Issues: Refund claim transferred to Consumer Welfare Fund due to unjust enrichment

Analysis:

Issue 1: Unjust enrichment in refund claim

The appellant, a builder and developer, filed a refund claim for service tax paid on flats sold to buyers of residential units. The claim was sanctioned but transferred to the Consumer Welfare Fund citing unjust enrichment. The appellant argued that they were not required to pay service tax on these transactions and provided evidence to support their claim, including sale deeds and certificates from buyers confirming no payment of service tax. The lower authorities transferred the refund claim based on the premise of unjust enrichment.

Analysis: The tribunal considered the evidence presented by the appellant, including the absence of service tax invoices issued to buyers and certificates from buyers confirming non-payment of service tax. It was established that the service tax amount was calculated and paid by the appellant, not passed on to the buyers. As a result, the tribunal held that the appellant had successfully demonstrated that unjust enrichment did not occur in this case. Therefore, the appellant was entitled to the refund claim, and the provisions of Section 11B of the Central Excise Act were deemed inapplicable.

Conclusion: The tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant. The judgment clarified that since the service tax was not liable to be paid by the appellant, the transfer of the refund claim to the Consumer Welfare Fund on the grounds of unjust enrichment was unfounded.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the tribunal's decision regarding the refund claim and unjust enrichment in the context of service tax on residential units sold by the appellant.