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2017 (4) TMI 1130 - AT - Service TaxRefund claim - Service Tax paid under works contract service for the various works executed by them for the Govt. of West Bengal and its various agencies for laying of pipelines for water supply, sewerage lines etc It is the case of the appellant that they are not liable to pay Service Tax - unjust enrichment - time bar - Held that - on the issue of time limitation, in the case of Jubilant Enterprises Pvt.Ltd. v. Commissioner of C.Ex., Mumbai-I 2014 (6) TMI 425 - CESTAT MUMBAI the Tribunal allowed the appeal on the identical situation and held that As the payment made by the appellant is not of service tax, therefore, as held by this Tribunal in the case of Shankar Ramchandra Auctioneers (2010 (4) TMI 391 - CESTAT, MUMBAI) the provisions of section 11B of the Central Excise Act are not applicable. Regarding unjust enrichment, the assessee sold the goods on a composite price inclusive of all duties, there is no question of unjust enrichment as has been held by the Tribunal in the case of Himatsingka Seide Ltd. v. Commissioner of Customs, Bangalore 2005 (3) TMI 333 - CESTAT, BANGALORE - The Tribunal in the case of Amadalavalasa Cooperative Sugars Ltd. v. CCE, Visakhapatnam 2007 (1) TMI 432 - CESTAT, BANGALORE held that unjust enrichment is not applicable as the contract price is inclusive of duty and duty payable reduced or becomes zero is immaterial. The refund should not be denied on the ground of time barred and unjust enrichment - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Time Bar for Refund Claims 2. Unjust Enrichment 3. Applicability of Section 11B of the Central Excise Act, 1944 4. Mistake of Law in Payment of Service Tax 5. Composite Contract Price and Inclusion of Service Tax Detailed Analysis: 1. Time Bar for Refund Claims: The appellant contested the rejection of their refund claims on the grounds of time bar, arguing that the amounts paid under mistake of law should not be treated as Service Tax, and thus the provisions under Section 11B of the Central Excise Act, 1944, would not apply. The Tribunal found that the Service Tax was collected wrongly from the appellant during 2007-08 and 2008-09. Citing the decision of the Hon’ble Karnataka High Court in Commr. of C.Ex. (Appeals), Bangalore v. KVR Construction, it was held that if the payment was made under a mistaken notion, it would not be considered a duty or Service Tax payable in law, and thus Section 11B would not apply. 2. Unjust Enrichment: The appellant argued that the work orders awarded by the Government included a clause that the prices quoted were inclusive of all taxes, and no amount was collected as Service Tax separately. The Tribunal acknowledged this, stating that if Service Tax is not payable for the contract, it cannot be presumed that the contract price includes Service Tax. The Tribunal referred to the decision in Himatsingka Seide Ltd. v. Commissioner of Customs, Bangalore, which held that when the sale price is inclusive of all duties, it means only the duty payable, and there is no unjust enrichment if excess duty paid by mistake is not passed on to the buyer. 3. Applicability of Section 11B of the Central Excise Act, 1944: The Tribunal noted that Section 11B generally governs the claim for refund of duty and interest paid on such duty. However, it was clarified that if there was no authority to collect Service Tax, the provisions of Section 11B would not apply. This was supported by the decision in Jubilant Enterprises Pvt.Ltd. v. Commissioner of C.Ex., Mumbai-I, where it was held that if the payment made is not of Service Tax, the provisions of Section 11B are not applicable. 4. Mistake of Law in Payment of Service Tax: The appellant argued that the amounts paid were under a mistaken notion of law and should be treated as deposits. The Tribunal referred to the decision in Geojit BNP Paribas Financial Services Ltd. v. CCE, Cus & ST, Kochi, where it was held that payment made under a mistake of fact (assuming the transaction was covered under the law) is not subject to Section 11B as it has no color of legality when paid. The Tribunal concluded that the amount paid by the appellant was not Service Tax and thus not subject to the limitations of Section 11B. 5. Composite Contract Price and Inclusion of Service Tax: The appellant provided evidence that the work orders were inclusive of all taxes, and no Service Tax was separately indicated. The Tribunal referred to the decision in Amadalavalasa Cooperative Sugars Ltd. v. CCE, Visakhapatnam, which held that in cases where the contract price is inclusive of duty payable, there cannot be unjust enrichment even if the duty payable is reduced or becomes zero. The Tribunal concluded that the composite contract price did not include Service Tax, and thus the appellant was entitled to a refund. Conclusion: The Tribunal allowed the appeal, holding that the appellant is entitled to a refund of the Service Tax paid mistakenly. The refund claims were not barred by limitation under Section 11B, and the principle of unjust enrichment did not apply due to the composite contract price. The Tribunal directed the jurisdictional Commissioner to return the deposited amount within 30 days.
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