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2018 (2) TMI 329 - AT - Service TaxRefund claim - payment under protest - service tax paid on service of blending and bottling of IMFL on behalf of their clients was not taxable under Business Auxiliary Service as clarified by Ministry of Finance vide F.No. 249/1/2006 CX.4 dated 27.10.2008 - denial on the ground of time limitation and unjust enrichment - Held that - Punjab & Haryana High Court in the case of Sarita Handa Exports (P) Ltd. 2010 (9) TMI 254 - PUNJAB AND HARYANA HIGH COURT has held that any refund application beyond period specified under 11B of the CEA should not be entertained unless refund is as a consequence of declaration of a provision as unconstitutional - Though the learned counsel for the assessee has submitted that the entire amount which is claimed as refund was paid under protest but it is not clear from the order of the Commissioner (Appeals) that whether the entire amount which is sought to be claimed as refund was paid under protest or not. This case is required to be remanded back to the original authority to examine two things - (a) Whether the entire service tax was paid under protest or not? - (b) the aspect of unjust enrichment should also be considered by the original authority in view of the documents produced by the assessee along with the certificate of CA certifying that incidence has not been passed on to the client. Appeal allowed by way of remand.
Issues:
- Eligibility for refund of service tax paid by the assessee - Application of Section 11B of the Act - Unjust enrichment and passing on of tax liability to clients Eligibility for Refund of Service Tax Paid by the Assessee: The appeal was filed by the Revenue against the order of the Commissioner (Appeals) granting a refund of &8377; 9,62,543 to the assessee but rejecting the refund of &8377; 15,66,169 on the ground of unjust enrichment. The adjudicating authority had initially rejected the entire refund claim, stating that the tax liability would be borne by the principal as per the agreement. The Commissioner (Appeals) upheld the decision of the adjudicating authority, denying the larger refund amount. The Revenue contended that the service tax element might have been included in the sale price of the products, ultimately passed on to consumers. The Commissioner (Appeals) allowed the refund as the tax was collected without legal authority, thus exempting it from the time limit under Section 11B. The Tribunal found this decision unsustainable in law, citing precedents that even in cases of mistaken service tax payment, Section 11B's time limit applies. Application of Section 11B of the Act: The Revenue argued that Section 11B should apply to the case, relying on various decisions supporting this view. However, the assessee contended that since the tax was paid under protest, Section 11B's time limit should not be applicable. The Tribunal noted that the Commissioner's decision to exempt the refund from Section 11B was legally untenable, as evidenced by previous Tribunal and High Court rulings. Unjust Enrichment and Passing on of Tax Liability to Clients: The Commissioner (Appeals) rejected the refund claim of &8377; 15,66,169 for the period from April 2006 to September 2007, citing lack of evidence that the tax burden was not transferred to clients. The assessee argued that the tax was paid under protest and not passed on to clients, supported by certified extracts from the cash book and a CA certificate. The Tribunal found the evidence presented by the assessee compelling and decided to remand the case to the original authority for further examination. The Tribunal emphasized the need to determine whether the entire service tax was paid under protest and to reassess the unjust enrichment aspect based on the evidence provided by the assessee. In conclusion, the Tribunal set aside the impugned order, allowing the appeal of the Revenue and the cross objection of the assessee, and remanded the matter to the original authority for a fresh decision considering all evidence on record and any additional evidence that may be presented by the assessee.
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