2021 (12) TMI 183 - AT - Service Tax

Refund of Service Tax - service tax was paid under the mistake of law - Business Auxiliary Services - reverse charge mechanism - principles of unjust enrichment - period April 2007 to June 2012 - HELD THAT - The M/S INTEROCEAN SHIPPING COMPANY VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2012 (12) TMI 477 - CESTAT NEW DELHI does not exclude the taxability of ship broking services under any other taxable category. However, the period involved in the proceedings before us is prior to 1 July 2012 when only specified services were taxable, and the onus was entirely upon the Revenue to prove classification and taxability of ship broking services under any other taxable category. No negative inference could be drawn merely from the fact that ship broker services does not appear in Section 66D of the negative list introduced with effect from 1 July 2012 whereby all services were made taxable, unless exempted. Instead of discharging the burden of correctly classifying and establishing taxability of ship broking services under a particular taxable category by putting the Appellant to notice, the Revenue has on the contrary sought to shift this burden upon the Appellant as the Notice dated 30 October 2014 did not even propose classification of ship broking services under any other taxable category. Unjust enrichment - HELD THAT - The Appellant had adduced a Certificate from a Chartered Accountant certifying the non-availment of credit of the service tax alleged to have been paid mistakenly under the category Business Auxiliary Services as also regarding the incidence of tax having not been passed on to any other person. There is merit in the contention of the Appellant that the Certificate of an expert cannot be discarded unless a contrary opinion has been expressed by another expert - the findings of the appellate authority as regards the CA Certificate dated 25 March 2015 being not a conclusive proof of the incidence of tax not having been passed on by the Appellant to any other person also cannot be accepted. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Refund of Service Tax.
2. Classification of Ship Broking Services.
3. Applicability of the Inter Ocean Shipping Company case.
4. Burden of Proof for Classification and Taxability.
5. Unjust Enrichment.

Issue-wise Detailed Analysis:

1. Refund of Service Tax:
The appellant, a shipping line, mistakenly paid service tax on ship broking services received from outside India under the category "Business Auxiliary Services" on a reverse charge basis for the period April 2007 to June 2012. The appellant filed a refund claim within one year of payment, which was rejected by the adjudicating authority and upheld by the Appellate Commissioner. The total amount involved was ?1,66,97,724/-.

2. Classification of Ship Broking Services:
The main point of contention was whether ship broking services fall under "Business Auxiliary Services." The Tribunal in the Inter Ocean Shipping Company case concluded that ship broking services could not be equated with a Commission Agent and thus were not covered by "Business Auxiliary Services." The Tribunal's decision was based on the nature of ship broking services, which are intermediary services and do not involve acting on behalf of a principal.

3. Applicability of the Inter Ocean Shipping Company case:
The appellant argued that the Inter Ocean case's decision on non-taxability of ship broking services under "Business Auxiliary Services" applies to their case as well. The Tribunal found this argument valid, noting that the Inter Ocean case did not depend on the domicile of the ship broker and that the nature of services in both cases was similar.

4. Burden of Proof for Classification and Taxability:
The burden to prove the correct classification and taxability of ship broking services was on the Revenue. The Tribunal cited the Jetlite (India) Ltd. and Dilip Kumar & Co. cases to support this point. The Tribunal found that the Revenue failed to propose any specific classification other than "Business Auxiliary Services" in the Show-cause Notice and could not shift this burden onto the appellant.

5. Unjust Enrichment:
The appellant provided a Chartered Accountant's certificate confirming that the incidence of service tax was not passed on to any other person. The Tribunal held that such a certificate should not be disregarded unless contradicted by another expert opinion. Additionally, the appellant's audited financial statements showed the claimed amount as receivable, further supporting the argument against unjust enrichment.

Conclusion:
The Tribunal set aside the impugned order, concluding that the ship broking services were not taxable under "Business Auxiliary Services" and that the appellant was entitled to a refund of the service tax paid. The appeal was allowed with consequential relief.