2017 (6) TMI 113 - AT - Service Tax

Refund claim - unjust enrichment - denial on the ground that the amount paid as service tax is based on self-assessment and filed ST 3 returns voluntarily that too before issuance of SCN shows that they accepted the liability - Held that - Rejection of the refund merely on the ground that the appellant has voluntarily paid the tax is not legally correct - Having accepted the decision of the Commissioner (Appeals), the department cannot turnaround and does not implement the decision of the Commissioner (Appeals) - the impugned orders denying the refund in both the appeals is not justified and correct - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of refund claim by Commissioner (Appeals)
- Validity of denial of refund based on self-assessment and voluntary payment of service tax
- Applicability of judicial precedents on refund claims
- Duty of assessing authority to follow appellate authority's decision on refunds

Analysis:
The case involved appeals against the rejection of a refund claim by the Commissioner (Appeals) related to service tax liabilities. The appellant, a Proprietor/Director of G-Tech Computer Education Centres, faced show cause notices for non-compliance with service tax rules. The appellant paid the service tax before the issuance of the notices, and demands were confirmed with penalties imposed. However, the Commissioner (Appeals) found the demands prior to one year from the show cause notices to be time-barred, leading to a refund application by the appellant. The lower authority refused the refund, stating the self-assessment and voluntary payment indicated acceptance of liability.

The appellant contended that the rejection of the refund was contrary to binding judicial precedents and that the department must honor the final judgment, which found no liability for the period preceding one year from the show cause notices. The appellant argued for a refund based on the recalculated tax liability, citing a decision emphasizing the duty of the assessing authority to refund amounts covered by appellate orders. The A.R. supported the impugned order's findings.

The Tribunal noted that the Commissioner (Appeals) had set aside the tax liability beyond the normal period and penalties, a decision unchallenged by the Revenue. The Tribunal held that the rejection of the refund solely on the basis of voluntary tax payment was legally incorrect. Citing a Kerala High Court decision, the Tribunal emphasized the duty of the assessing authority to follow appellate decisions on refunds. Consequently, the Tribunal set aside the impugned orders denying the refund, providing consequential relief if necessary.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of honoring appellate decisions on refunds and rejecting the denial of the refund based solely on voluntary tax payment. The judgment highlighted the duty of the assessing authority to implement appellate decisions regarding refunds, ensuring compliance with legal precedents and principles.