2019 (8) TMI 968 - AT - Service Tax

Scope of SCN - Refund of service tax - unjust enrichment - HELD THAT - The SCN that refers to refund application filed by the appellant has raised objection only with regard to aspect of unjust enrichment. Whereas the Adjudicating Authority as well as the Ld. Commissioner (Appeals) had gone into the aspect of nature of services whether the services fall under works contract service or otherwise. Such an important issue cannot be dealt without making any allegations in the show cause notice. Both the authorities have travelled beyond the scope of show cause notice which is legally not permissible for the authority to deal with at such stage of adjudication as well by Commissioner (Appeals) as this is a settled law in various judgements - reference can be made to the case of PRINCE KHADI WOOLLEN HANDLOOM PROD. COOP. INDL. SOCIETY VERSUS CCE. 1996 (11) TMI 72 - SC ORDER - thus both the authorities who have decided the issue that the services provided by the appellant is not of works contract and consequently rejected the refund claim is absolutely illegal and incorrect. Whether there is unjust enrichment or otherwise? - HELD THAT - The appellant has not passed the incidence of refund amount of 14 lakhs to any other person. Against this finding no challenge was made by the department. Therefore this issue on unjust enrichment attained finality in favour of the appellant - It is also observed that appellant have issued credit note to M/s Malani Construction for an amount of 14 lakhs towards Service Tax which was initially charged in the bill. There is absolutely no doubt that the appellant have not passed on the incidence of Service Tax paid by them to any other person. Therefore not only on the basis of evidence but as per clear concluding finding given by the Commissioner (Appeal) in his order in para 10 the issue of unjust enrichment does not exist. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Unjust enrichment in refund claim.
2. Nature of services - works contract or otherwise.

Analysis:

Issue 1: Unjust Enrichment in Refund Claim

The appellant filed a refund claim for Service Tax paid during a specific period when the exemption was withdrawn. The Adjudicating Authority rejected the claim citing unjust enrichment. The appellant argued that they proved no unjust enrichment as the main contractor, M/s Malani Construction, certified they never paid Service Tax to the appellant. The appellant submitted documents supporting their claim, including a certificate from the main contractor. The Ld. Commissioner (Appeals) remanded the case for verification, but the subsequent order again rejected the refund claim. The appellant contended that the burden of Service Tax was not passed on, and the authorities accepted this fact. The appellate tribunal found in favor of the appellant, stating that no challenge was made by the department regarding unjust enrichment. The tribunal concluded that the appellant was entitled to the refund as they did not pass on the tax burden to any other party.

Issue 2: Nature of Services - Works Contract or Otherwise

The appellant argued that the issue of whether the services provided were works contract services was not raised in the show cause notice. They contended that the authorities went beyond the scope of the notice by delving into this aspect. The tribunal agreed with the appellant, citing legal precedents that such crucial issues cannot be decided without proper allegations in the show cause notice. The authorities' decision that the services were not works contract services was deemed illegal and incorrect. The tribunal quashed these findings and focused solely on the issue of unjust enrichment. After thorough examination of the records and evidence presented, the tribunal concluded that the appellant had indeed provided works contract services and had not passed on the Service Tax burden, making them eligible for the refund. The impugned order was set aside, and the appeal was allowed in favor of the appellant.

In conclusion, the tribunal ruled in favor of the appellant, allowing the refund claim and dismissing the objections raised by the revenue authorities regarding unjust enrichment and the nature of services provided.

This detailed analysis covers the key issues and the tribunal's decision in the legal judgment.