2017 (11) TMI 544 - AT - Service Tax

Refund claim - service tax paid under the Work Contract Service - time limitation - Held that - identical issue has come up before the Tribunal in the case of Ramky Infrastructure Ltd. Vs. CST-II Kolkata 2017 (4) TMI 1130 - CESTAT KOLKATA , where it was 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 CEA are not applicable - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order-in-appeal denying refund claim for service tax paid under 'Work Contract Service' without collecting it from Municipal Corporation - Applicability of unjust enrichment principle - Interpretation of inclusive of all duties in composite price - Applicability of Section 11B for refund claim - Authority to collect service tax - Limitation for claiming refund - Principle of unjust enrichment in composite contract price.

Analysis:
The appellant filed an appeal against the order-in-appeal denying their refund claim for service tax paid under 'Work Contract Service' without collecting it from the Municipal Corporation. The appellant had doubts about the liability of service tax for the nature of work performed and paid the service tax from their own pocket. The Tribunal referred to a similar case where it was held that in cases where goods are sold on a composite price inclusive of all duties, there is no unjust enrichment. The Tribunal emphasized that the sale price includes only the duty payable, and there is no basis for presuming that excess duty paid is passed on to the buyer. Therefore, the Tribunal allowed the appeal with consequential relief, following the same principle.

In another case, the Tribunal allowed refund claims for service tax paid on liaisoning services that were not subject to service tax. The Tribunal held that when the department has no authority to collect service tax on certain activities, they must refund the amount paid. The Tribunal also noted that the limitation under Section 11B would not be applicable in cases of mistaken tax payment. Additionally, the principle of unjust enrichment does not apply in cases of composite contract prices. The Tribunal directed the jurisdictional Commissioner to return the deposited amount as per law, emphasizing that it is a return of deposit and not a refund of tax.

The Tribunal considered various judicial decisions and held that the appellant is entitled to a refund of the tax paid by mistake. Refund claims should not be rejected based on time limitations or unjust enrichment in such situations. The Tribunal found no reason to reject the refund claims and allowed the appellant's claim for refund of the tax paid by mistake. Following their earlier order, the Tribunal set aside the impugned order and allowed the appellant's appeal, granting them the refund of the tax amount paid in error.

In conclusion, the Tribunal upheld the appellant's claim for refund of service tax paid under 'Work Contract Service' and emphasized the principles of unjust enrichment, interpretation of inclusive of all duties in composite prices, and the applicability of Section 11B for refund claims. The Tribunal's decision was based on previous judicial interpretations and rulings, ensuring that the appellant is entitled to the refund of the tax amount paid mistakenly.