2017 (5) TMI 55 - AT - Service Tax

Refund claim - service tax paid on exempt service - rejection on the ground of time limitation u/s 11B of the CEA 1944 and unjust enrichment - Held that - the limitation prescribed u/s 11B is not applicable to the amount paid under mistake for the reason that such amount does not have the colour of tax/duty - the refund claim cannot be rejected on the ground of limitation. Unjust enrichment - Held that - when CA certificate is produced to establish that the incidence of duty has been borne by the assessee, the same has to be considered if acceptable otherwise - In the present case, the veracity of the CA certificate is not in dispute. The appellants have produced the Ledger account as well as Bank Statement alongwith copy of the cheque and Chartered Accountant certificate to show that the incidence of duty has not been passed on to the educational institution M/s GMR Institute of Technology to whom the assessees had provided the services - the refund claim cannot be rejected on the ground of unjust enrichment. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection by Commissioner (Appeals) - Limitation under Section 11B of Central Excise Act 1944 and unjust enrichment.

Analysis:
The appellants, registered under outdoor catering services, mistakenly paid service tax for services provided to educational institutions. They later realized the exemption under notification No.25/2012-ST and filed refund claims, rejected partially by the original authority citing limitation under Section 11B. Commissioner (Appeals) rejected the entire claim due to limitation and unjust enrichment, leading to the appeals.

On behalf of the assessees, it was argued that tax paid under mistake does not fall under Section 11B limitation. Various judgments were cited to support this argument. The assessees contended that the amount collected from educational institutions was returned, supported by ledger accounts, bank statements, and CA certificates. The rejection based on unjust enrichment was challenged, emphasizing that the tax burden was not passed on.

The Department reiterated the findings, stating the refund rejection was justified due to unjust enrichment. However, the Tribunal noted that the outdoor catering services were not taxable when provided to educational institutions. The Tribunal agreed with the appellants that the limitation under Section 11B does not apply to amounts paid under mistake. Additionally, the CA certificate and supporting documents proved that the tax burden was not passed on to the educational institution, thus rejecting the unjust enrichment argument.

In conclusion, the Tribunal held that the rejection of the refund claim was unjustified. The impugned order was set aside, and the appeals were allowed with consequential reliefs, if any.