2019 (5) TMI 661 - AT - Service Tax

Refund claim - unjust enrichment - amount deposited to Consumer Welfare Fund - HELD THAT - The appellant has filed the refund claim of service tax reimbursed by the MES based on their letter dt. 24/01/2016 and the refund claim has been filed at the instance of the MES as the MES is the ultimate consumer and the entire tax burden borne by the MES only and has not been passed on to any other person - the appellant is claiming the refund as a representative of the MES and not on his own account and therefore the principle of unjust enrichment under the provisions of Section 11B of the Central Excise Act is not applicable to the present case. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Refund claim for service tax, unjust enrichment, entitlement to refund, applicability of Section 11B of the Central Excise Act.

Analysis:
1. Refund Claim for Service Tax: The appellant filed a refund claim for service tax amounting to ?8,51,384 on the grounds of being a service provider to Military Engineering Services (MES) and carrying out construction, repair, and maintenance services for defense structures. The appellant was initially exempted from service tax payment but had to pay it when the exemption was withdrawn in April 2015. The exemption was later restored with retrospective effect, making the appellant eligible for the refund.

2. Unjust Enrichment: The Assistant Commissioner rejected the refund claim citing unjust enrichment. However, the appellant argued that the refund amount should be deposited into the Government MES account as directed by MES. The appellant contended that the MES is the ultimate consumer, and the tax burden was not passed on to any other person. Therefore, the principle of unjust enrichment under Section 11B of the Central Excise Act was deemed inapplicable.

3. Entitlement to Refund: The Commissioner (Appeals) allowed the refund but directed it to be credited to the Consumer Welfare Fund. The appellant challenged this decision, emphasizing that they were entitled to the refund as representatives of MES, and the amount rightfully belonged to the Central Government. The appellant presented case laws to support their argument, highlighting similar instances where refunds were granted under comparable circumstances.

4. Applicability of Section 11B: The Tribunal, after considering submissions from both sides and examining the records, concluded that the appellant had paid the service tax, which was reimbursed by MES. The Tribunal found that the refund claim was filed at the instance of MES, as they were the ultimate consumer bearing the tax burden. Since the appellant acted as a representative of MES, the principle of unjust enrichment was deemed inapplicable. The Tribunal noted that other Commissionerates had allowed refunds under similar notifications, supporting the appellant's entitlement to the refund.

In light of the above analysis, the Tribunal allowed the appeal, directing the refund of ?8,51,384 to be paid into the MES account as per the agreement. The decision was based on the understanding that the appellant was entitled to the refund as representatives of MES, and the amount did not lead to unjust enrichment as per the provisions of the Central Excise Act.