2015 (9) TMI 993 - AT - Service Tax

Refund of service tax - Business Auxiliary Services - Unjust enrichment - Held that - Appellant has not charged any service tax separately but when the revenue authorities directed them to pay service tax under the category of Business Auxiliary Service , it is seen that the appellant had discharged service tax liability considering the amount recovered from their customers as cum-tax amount and worked out the service tax liability. - There being no dispute as to the fact that the service tax liability has been discharged based upon working back from the amount which has been recovered from their customers, question of unjust enrichment arises and the appellant is not able to dislodge the presumptions and that they have recovered the amount of service tax from their customers. On this factual matrix, the appeal fails on the ground of unjust enrichment. - Decided against assessee.

Summary

Issues:
Refund claim under service tax paid under mistake of law, unjust enrichment, taxability under Business Auxiliary Service, limitation period for filing refund claim.

Analysis:
The appeal involved a refund claim of service tax amounting to Rs. 4,20,49,912 filed by the appellant, who claimed to have paid the tax under the category of 'Business Auxiliary Service' mistakenly. The lower authorities issued a show cause notice questioning the refund claim, leading to adjudication. The adjudicating authority rejected the claim citing limitation period issues and unjust enrichment, as the service tax liability was correctly paid under Business Auxiliary Service. The first appellate authority agreed with the appellant on non-taxability under Business Auxiliary Service but rejected the claim on unjust enrichment grounds.

The appellant argued that the tax was not payable under 'Business Auxiliary Services' before 01/06/2007, as accepted by authorities, and relied on a Karnataka High Court judgment. They contended that the tax amount was not recovered from customers, supported by a Chartered Accountant's certificate. The Departmental Representative maintained that the appellant failed to prove non-recovery from customers and that the tax was paid under Business Auxiliary Service before 01/06/2007.

The Tribunal noted the appellant's engagement in iron ore extraction, a service taxable under 'Mining of Mineral services' from 01/06/2007, while the tax was paid under 'Business Auxiliary Services' for the period in question. The first appellate authority's finding on non-taxability under Business Auxiliary Service was in favor of the appellant. However, the refund claim was rejected due to unjust enrichment. The appellant's billing practices indicated inclusion of service tax in customer payments, leading to a presumption of passing on the tax burden. The Chartered Accountant's certificate did not alter this conclusion, resulting in the appeal's dismissal on unjust enrichment grounds, disregarding case laws cited by the appellant.

The Tribunal upheld the first appellate authority's order, emphasizing the appeal's failure on unjust enrichment grounds, without delving into other arguments raised by the appellant, including the limitation issue. Ultimately, the appeal was rejected based on unjust enrichment, as pronounced in court.