2016 (9) TMI 744 - AT - Service Tax

Refund - payment of excess service tax on GTA service - unjust enrichment - Subsequently realizing that they have paid the excess service tax on the GTA services, they reversed the credit of such excess amount and claimed refund of the same from the authorities vide their refund application dated 27/2/2009. - appellants also contended that being manufacturer exporter of the goods, the service tax paid on the services utilized by them for export of the goods is, in any case refundable to them under Notification No. 40/2007-ST as amended, and in terms of Rule 5 of Cenvat Credit Rules, where the question of unjust enrichment would not arise. Held that - Though the said contention of the appellants stand reproduced by Commissioner (Appeals) in his impugned order but the same does not stand adverted to and there is no finding on the same. As such, I am of the view that the matter needs to be re-examined, for which purpose I set aside the impugned order and remand the matter to original Adjudicating Authority. - Matter remanded back.

Issues:
1. Applicability of the principle of unjust enrichment to a refund claimed and sanctioned.
2. Consideration of excess service tax paid by the appellant.
3. Refund eligibility under Notification No. 40/2007-ST for manufacturer exporters.

Issue 1: Applicability of the principle of unjust enrichment
The appellant, engaged in manufacturing automotive cylinder heads, paid excess service tax on GTA services and sought a refund. The Adjudicating Authority allowed the refund but credited it to the consumer welfare fund due to unjust enrichment. The Commissioner (Appeals) upheld this decision. The appellant argued that the excess tax was not part of the final product value, supported by financial documents and a Chartered Engineer certificate. However, the lower authorities disagreed, stating the certificate alone was insufficient. The appellate tribunal found the matter required re-examination and remanded it to the original Adjudicating Authority. The appellant was granted an opportunity to present their case and demonstrate that the disputed amount did not contribute to the final product value.

Issue 2: Consideration of excess service tax paid
The appellant, under Notification No. 12/2008, paid service tax on GTA services at the full freight value, resulting in an overpayment of ?2,10,810. Upon realizing the error, they reversed the credit and applied for a refund. Despite the excess payment not being utilized as credit, the authorities maintained that it was part of the product value. The tribunal acknowledged the appellant's argument and directed a re-examination to determine if the excess amount truly impacted the final product value.

Issue 3: Refund eligibility under Notification No. 40/2007-ST
The appellant, being a manufacturer exporter, contended that the service tax paid for goods export was refundable under Notification No. 40/2007-ST and Rule 5 of Cenvat Credit Rules. This contention was not addressed in the previous orders, prompting the tribunal to remand the matter for further examination. The Adjudicating Authority was instructed to consider the appellant's claim for refund under the mentioned provisions, ensuring a comprehensive review of all aspects related to the refund eligibility for manufacturer exporters.

This detailed analysis of the judgment highlights the key issues addressed, the arguments presented by the parties involved, and the tribunal's decision to remand the matter for further examination, emphasizing the importance of substantiating claims and complying with relevant legal provisions for refund eligibility.

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