2017 (7) TMI 945 - AT - Service Tax

Refund of service tax - unjust enrichment - Section 11B(2) of Central Excise Act 1944 - denial on the ground of non-production of evidence to establish that the burden of tax payment has not been passed on to the Customer - Held that - The learned Commissioner (Appeals) has rightly held that the principles of unjust enrichment is not applicable in the present case and further I also find that the adjudicating authority while crediting the refund claim to the Consumer Welfare Fund has travelled beyond the order of the Tribunal - there is no infirmity in the findings of the impugned order which needs to be interfered with - appeal dismissed - decided against Revenue.

Issues:
- Appeal against order setting aside the Order-in-Original and allowing the appeal of the assessee with consequential benefit.
- Refund of service tax credited to Consumer Welfare Fund without payment to appellants due to non-production of evidence.
- Application of principles of res judicata and unjust enrichment.
- Compliance with show-cause notice requirements.
- Entitlement to refund and evidence of duty element not passed on to the buyer.
- Violation of judicial discipline in crediting refund to Consumer Welfare Fund.

Analysis:
The appeal was filed by the Revenue against an order setting aside the Order-in-Original and allowing the appeal of the assessee with consequential benefit. The respondent, a service tax assessee under 'Intellectual Property Service,' paid service tax for royalty charges for usage of 'Trade Mark' to a non-resident service provider and claimed a refund based on a notification by the Central Government. The Department sanctioned the refund but credited it to the Consumer Welfare Fund without payment to the appellants due to the lack of evidence regarding the burden of tax payment. The Commissioner (Appeals) allowed the appeal of the respondent, setting aside the Order-in-Original, leading to the present appeal.

The learned AR for the Revenue argued that the order sanctioning the refund and crediting it to the Consumer Welfare Fund is in accordance with a judgment of the Supreme Court. On the other hand, the counsel for the respondent defended the impugned order, citing various decisions supporting the contention that the refund should not have been credited to the Consumer Welfare Fund. The counsel argued that the lower authority erred in applying the principle of unjust enrichment and that the order was beyond the scope of the show-cause notice.

The counsel for the assessee further contended that the issue of unjust enrichment should have been raised in the show-cause notice itself, as per relevant circulars, and that the Department's failure to do so implied acceptance of the respondent's declaration. Additionally, it was argued that the ground of unjust enrichment does not apply in cases of service recipients paying service tax on a reverse charge basis, supported by relevant case law. The counsel also highlighted the submission of a CA certificate showing the duty element was not passed on to the buyer as sufficient evidence.

After considering the submissions and perusing the impugned order and relevant judgments, the Tribunal upheld the Commissioner (Appeals)' decision, stating that there was no infirmity in the findings. The Tribunal held that the principles of unjust enrichment did not apply in the case, and the adjudicating authority exceeded its jurisdiction by crediting the refund to the Consumer Welfare Fund. The appeal of the Department was dismissed, upholding the impugned order.

In conclusion, the Tribunal found no grounds to interfere with the impugned order, rejecting the Department's appeal and upholding the decision in favor of the respondent.

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