2015 (1) TMI 283 - AT - Service Tax

Revision of already sanctioned refund claim - Unjust enrichment - Held that - It is an admitted fact that the appellant did not pay the tax owing to the fact that the activities undertaken in its client s premises was not confirming to any of the defined taxable services. Further, the appellant had specifically pleaded before the Revisionary authority that no service tax has been collected from its clients. Non-passing of the tax incidence to its client is evident from the fact that the adjudged amount was paid by the appellant on 28.01.2009, pursuant to the adjudication order dated 24.12.2008, wherein it has been held that the appellant is liable to pay service tax under the category of Business Auxiliary Service . Since, the refund claim was lodged pursuant to the favorable Appellate order dated 20.03.2009, which was sanctioned by the original authority upon objective analysis of the facts vis-a-vis the statutory provisions, it is not proper and appropriate on the part of the revisionary authority to deny the benefit of refund on the ground that the service tax incidence has been passed on to any other person. It is observed from the impugned order that no findings have been recorded with regard to the claim of appellant that no service tax has been collected from the clients. - amount paid subsequent to the date of adjudication order cannot be hit by the doctrine of unjust enrichment, and as such, the appellant will be eligible for refund of the amount. In this context, I rely on the decisions of the Tribunal cited by the learned counsel in the preceding paragraph, wherein it has been held that the revenue is not correct in raising the ground of unjust enrichment as the duty was deposited by the assessee after the adjudication order. Upon satisfying himself that the amount paid by the appellant is refundable, the Deputy Commissioner (empowered authority) has passed the order, sanctioning the refund in favour of the appellant. Thus, the refund amount cannot be taken back by invoking the provisions of Section 84 of the Finance Act, 1994, by the authority who is not competent to do so under the Central Excise statute. Therefore, I am of the considered view that refund already sanctioned to the appellant cannot be restored in favor of the revenue. My said view gets support from the decision of the Tribunal in the case of Gujarat State Fertilizers & Chemicals Ltd. (2005 (7) TMI 560 - CESTAT, MUMBAI) relied on by the appellant, wherein it has been held that principles of unjust enrichment not invocable for recovery of amount already granted. - Decided in favour of assesse.

Summary

Issues:
1. Whether the sanctioned refund in favor of the revenue should be restored.
2. Application of the doctrine of unjust enrichment in the case.
3. Competency of the authority to invoke Section 84 of the Finance Act, 1994.

Analysis:

Issue 1:
The appeal was against the Revision Order passed by the Commissioner, seeking to restore the sanctioned refund in favor of the revenue. The appellant had filed a refund claim after a favorable Appellate order, which was adjudicated by the Deputy Commissioner by sanctioning the refund amount. The Tribunal observed that the revisionary authority did not examine the aspect of unjust enrichment properly. The appellant argued that the amount was paid during the pendency of appeal and claimed as a refund after a favorable order, citing precedents to support their stance. The Tribunal held that the refund was rightly sanctioned by the original authority after an objective analysis, and the revisionary authority cannot deny the refund based on unjust enrichment, especially when the tax incidence was not passed on to others.

Issue 2:
Regarding the doctrine of unjust enrichment, the appellant contended that no service tax was collected from clients, and the amount was paid post the adjudication order. The Tribunal noted that the appellant did not pass on the tax incidence to clients, as evident from the facts presented. The Tribunal found support in the appellant's submissions and held that the doctrine of unjust enrichment does not apply when the tax was paid after the adjudication order and subsequently claimed as a refund due to a favorable appellate order. The Tribunal relied on precedents to support this position.

Issue 3:
The Tribunal analyzed the competency of the authority to invoke Section 84 of the Finance Act, 1994. It was observed that the Deputy Commissioner, as the empowered authority, had sanctioned the refund after satisfying that it was due. The Tribunal concluded that the refund amount, once sanctioned by the competent authority, cannot be restored in favor of the revenue by an authority not empowered to do so. Citing a precedent, the Tribunal emphasized that the principles of unjust enrichment are not applicable for the recovery of an amount already granted as a refund.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.