2020 (3) TMI 912 - AT - Service Tax

Refund of service tax - tax paid under protest - Club and Association service - rejection of claim on the ground that the appellant has not been able to prove that the burden of tax has not been passed on to another - HELD THAT - The issue as to whether Club or Association Services is subject to levy of service tax is decided by the Hon ble Apex Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. 2019 (10) TMI 160 - SUPREME COURT in favour of the assessee. The Commissioner (Appeals) has observed that the issue whether the refund claim is hit by the bar of unjust enrichment is too premature to be considered. However, he has proceeded to reject the refund claim - the appellant has to be given a further opportunity to prove, whether the burden of tax has been passed on to another. Matter remanded to the adjudicating who shall decide afresh as to whether the refund is hit by unjust enrichment - appeal allowed by way of remand.

Summary

Issues:
1. Payment of service tax on "Club" or "Association" services.
2. Rejection of refund claim based on unjust enrichment.

Analysis:

Issue 1: Payment of service tax on "Club" or "Association" services
The appellant contended that the issue of service tax on "Club" or "Association" services has been settled by the Hon'ble Supreme Court in the case of State of West Bengal & Ors. Vs. Calcutta Club Ltd. The appellant paid the service tax "under protest" during the disputed period and filed a refund claim as the services were deemed non-taxable. The Commissioner (Appeals) rejected the refund claim on the grounds of lack of evidence that the tax burden was not passed on to others. The appellant argued that they did not collect service tax from the recipients, which could be substantiated with documents. Given the settled issue by the Supreme Court, the appellant requested a remand to verify if the refund claim was affected by unjust enrichment.

Issue 2: Rejection of refund claim based on unjust enrichment
The Authorized Representative for the Revenue supported the findings of the impugned order. Upon review of the records and the Supreme Court decision in favor of the assessee, the Tribunal found that the issue of service tax on "Club" or "Association" services had been settled. The Commissioner (Appeals) prematurely rejected the refund claim without proper consideration of unjust enrichment. The Tribunal concluded that the appellant should be given an opportunity to demonstrate whether the tax burden was transferred to others. Consequently, the impugned order was set aside, and the matter was remanded to the adjudicating authority for a fresh decision on whether the refund was affected by unjust enrichment. The appeals were allowed with consequential reliefs as deemed necessary.