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2021 (12) TMI 1232 - AT - Service TaxRefund claim - time limitation - Service tax was paid on advance received - later the order was cancelled - refund claim was rejected holding that the same is filed beyond one year of the date of payment of service tax - Section 11B of the Central Excise Act, 1944 - principles of unjust enrichment - HELD THAT - In this case, the appellant was required to pay service tax in terms of Rule 3 of Point of Taxation Rules, 2011 on advances received in respect of any services to be provided. The said advances so received is required to be adjusted against the amount of service provided by the appellant. Admitted, in this case, no such service has been provided by the appellant. The service tax paid by the appellant is only a provision for payment of service tax on the services which were to be provided later. Therefore, in terms of Section 11B (5) Explanation B (eb) which provides that in case where the duty of excise is paid provisionally under this Act or the Rules made there under, the date of adjustment of duty after the finalization of assessment thereof is the relevant date. Admittedly, the service tax paid by the appellant was provisionally for the services to be provided later on, but later on, no service has been provided by the appellant and the purchase orders were cancelled. In those circumstances, the amount so paid provisionally is required to be adjusted when the purchase orders were cancelled and the date of which the purchase orders were cancelled is the relevant date for filing the refund claim - it is clear that the refund claims were required to be filed within one year from the date of cancellation of the purchase orders in terms of Section 11B (5) Explanation B (eb) of the ACT, 1944. The relevant date for filing the refund claim is the cancellation of the purchase orders in terms of Section 11B (5) Explanation B (eb) of the Act - If the refund claims are filed within one year from the date of cancellation of the purchase orders, the same shall be entertained as the refund claim are filed in time. The issue of passing the bar of unjust enrichment shall be examined by the adjudicating authority based on documents placed by the appellants - matter remanded back to the adjudicating authority who shall entertain their refund claims. Appeal allowed by way of remand.
Issues Involved:
1. Refund claim barred by limitation. 2. Applicability of unjust enrichment. 3. Relevant date for filing the refund claim. Detailed Analysis: 1. Refund Claim Barred by Limitation: The appellant's refund claim was rejected on the grounds of being filed beyond the one-year limitation period specified under Section 11B of the Central Excise Act, 1944. The appellant argued that the service tax was paid on advances for services not rendered due to the cancellation of purchase orders. The refund claim was initially rejected by the adjudicating authority and upheld by the Commissioner (Appeals). The appellant contended that the relevant date for the limitation period should be the date of cancellation of the purchase orders, not the date of service tax payment. The tribunal examined Section 11B and its explanation, which includes the provision that the relevant date can be the date of adjustment of duty after the final assessment. It was concluded that since the service tax was paid provisionally for services to be provided later, the relevant date for filing the refund claim should be the date of cancellation of the purchase orders. 2. Applicability of Unjust Enrichment: The appellant argued that the doctrine of unjust enrichment does not apply as the advances, including the service tax element, were refunded or adjusted against future orders. They provided evidence such as balance sheets and relied on various judicial precedents to support their claim. The tribunal noted that the appellant had shown the service tax as "Service tax on customer advances" and "Balance with Statutory/Government Authorities," indicating that the burden was not passed to third parties. The adjudicating authority was directed to examine whether the bar of unjust enrichment applies based on the documents provided by the appellant. 3. Relevant Date for Filing the Refund Claim: The tribunal held that the relevant date for filing the refund claim is the date of cancellation of the purchase orders, as per Section 11B (5) Explanation B (eb) of the Act. The adjudicating authority was instructed to verify if the refund claims were filed within one year from the date of cancellation of the purchase orders. Conclusion: The tribunal set aside the impugned order and remanded the matter back to the adjudicating authority to determine if the refund claims were barred by limitation and if the bar of unjust enrichment applies. The adjudicating authority is to entertain the refund claims based on the relevant date being the date of cancellation of the purchase orders and examine the issue of unjust enrichment based on the appellant's documentation. Result: The appeal was disposed of by way of remand.
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