2018 (4) TMI 667 - AT - Service Tax

Refund claim - time limitation - Section 11B of Central Excise Act, 1944 - unjust enrichment - whether the respondent herein is eligible for the refund of the amount paid as service tax though not payable? - Held that - the respondent had made payment of service tax under an assumption that the respondent was liable to do so when there was no liability - the issue covered by the decision in the case of M/s Parijat Construction, M/s Giriraj Construction Versus Commissioner of Central Excise 2017 (10) TMI 659 - BOMBAY HIGH COURT , where it was held that the limitation prescribed under Section 11 B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. Unjust enrichment - Held that - the respondent had produced a Chartered Accountant s certificate indicating clearly that the amount of refund claim filed by them are reflected in the balance sheet as amounts receivable from the Central Excise department and they have not passed on the amount to their customers - In the absence of any contrary evidence to indicate that respondent has recovered the amount from their customers, the first appellate authority has come to a correct conclusion in holding that there is no unjust enrichment in this case. Refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the refund claim filed by the respondent is time-barred under Section 11B of the Central Excise Act, 1944 as applied to the Finance Act, 1994.
2. Whether the claim is affected by the principles of unjust enrichment.

Analysis:
1. The appeal involved a dispute regarding the eligibility of the respondent for a refund of service tax paid erroneously. The respondent had discharged service tax liability on invoices raised for labour charges, assuming it was payable. However, upon a subsequent realization that the fabrication activity undertaken was considered manufacturing and liable for Central Excise duty, the respondent settled the duty before the Settlement Commission. The refund claim for the service tax paid was rejected by the adjudicating authority citing limitation and unjust enrichment. The first appellate authority set aside the rejection, leading to the current appeal.

2. The appellant argued that the refund claim was time-barred under Section 11B due to the application being filed after one year of the relevant date. Additionally, the appellant contended that the doctrine of unjust enrichment applied as the respondent had collected service tax from customers on invoices for labour charges. The appellant cited relevant case laws to support their arguments.

3. The respondent, on the other hand, asserted that the service tax liability discharged by them was not required as they were liable for Central Excise duty, which they had paid. The respondent argued that the service tax collected by revenue authorities was unauthorized, and hence, the limitation under Section 11B would not apply. The respondent relied on judgments supporting their position.

4. The Tribunal considered the issues at hand and found that the respondent had paid service tax under the assumption of liability when none existed. The Tribunal noted that the service tax amount was held back by revenue authorities without legal authority. The first appellate authority's decision was upheld, emphasizing that the refund claim was wrongly rejected on limitation grounds. The Tribunal referenced relevant High Court judgments supporting the respondent's position.

5. Regarding unjust enrichment, the Tribunal noted that the respondent had provided a Chartered Accountant's certificate showing the refund amount as receivable from the Central Excise department, not passed on to customers. The absence of evidence showing recovery from customers led the Tribunal to agree with the first appellate authority's conclusion of no unjust enrichment. The Tribunal found the impugned order legally sound, free from defects, and rejected the appeal accordingly.