2008 (8) TMI 102 - AT - Service Tax

Air Travel Agent - there is no dispute that the Respondent had refunded the amounts to their customers on cancellation of their tickets Thus, it is established that the Respondent had not passed the incidence of tax to any other person. Commissioner (Appeals) rightly set aside the demand of duty - doctrine of principle of unjust enrichment is not attracted

Summary

Issues:
1. Disallowance of adjustment of service tax by the Adjudicating Authority.
2. Appeal against the order of the Commissioner (Appeals) by the Revenue.
3. Doctrine of unjust enrichment application by the Revenue.

Analysis:
1. The case involved the disallowance of adjustment of service tax by the Adjudicating Authority, which was upheld by the Commissioner (Appeals). The Tribunal, in its Final Order dated 1.6.2006, remanded the matter back to the Commissioner (Appeals) for further consideration. The Tribunal emphasized the need for the Commissioner (Appeals) to review all documents and evidence presented by the appellant, particularly regarding the payment of service tax on cancelled tickets. The Tribunal directed a fresh order to be passed on merits, including a reevaluation of the question of limitation. Compliance with the Tribunal's order led to the Commissioner (Appeals) setting aside the demand of Rs. 2,55,059/-, prompting the Revenue to file an appeal against this decision.

2. The Revenue, through its representative, reiterated the grounds of appeal, arguing that despite the refunds made by the Respondent to clients for cancelled tickets, the doctrine of unjust enrichment should apply. The Revenue relied on a previous decision by the Tribunal in the case of Grasim Industries Ltd. vs. Commissioner of Central Excise, Bhopal. However, upon reviewing the records and hearing both sides, it was established that the Respondent had indeed refunded the amounts to customers upon ticket cancellations, thereby not passing the tax burden to any other party. Consequently, the Commissioner (Appeals) decision to set aside the duty demand was upheld, and the appeal by the Revenue was rejected.

3. The application of the doctrine of unjust enrichment was a crucial aspect of the case, with the Revenue contending that despite the refunds made to clients, the tax liability should still apply. However, the Tribunal's analysis revealed that the Respondent had not passed on the tax burden to any other entity, as evidenced by the refunds issued to customers. This lack of passing on the tax incidence led to the rejection of the Revenue's appeal and the affirmation of the Commissioner (Appeals) decision.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, and the final decision rendered by the Tribunal, providing a detailed understanding of the legal proceedings and outcomes in the case.