2022 (1) TMI 1176 - AT - Service Tax

Refund of Service tax paid by mistake - amount mistakenly paid was thus a deposit or not - refund rejected observing that the appellant were registered with the Department and was aware that they are required to deposit service tax on the taxable services - claim has been filed after more than one year from the date of deposit of the tax - Applicability of time limitation - Applicability of unjust enrichment - HELD THAT - The service tax was not leviable on the services provided by the appellants, which was paid by mistake by the appellants, thus, it will be treated as deposit, ipso facto, and are entitled for refund - This fact is more evident as the services provided by the appellants are - route survey, design, supply of material for construction, erection and commissioning of 33KV D/C Line on Panther Conductor for 2.5 km from 132 KV GSS, Equipment for the work of urban focus programme, equipment for providing HVD/LVD system, etc. Time Limitation - HELD THAT - Limitation u/s 11B will not be applicable as the amount deposited is not tax and, at best, revenue deposit. Applicability of unjust enrichment - HELD THAT - In view of the work orders, which were issued to the appellants in competitive open bid, as per contract it is clear that the prices are Firm in all respect and Independent of any variation. It is also not in dispute that the appellants have not charged any service tax in their invoices. I am of the view that unjust enrichment is also not applicable.

Summary

Issues:
- Whether the Commissioner (Appeals) rightly rejected the refund claim.

Analysis:
The appellant filed a refund claim for service tax paid during 2007-08 to 2009-10, amounting to ?31,50,587, contending that the services provided were not liable to service tax as per a circular. The appellant argued that the amount paid was a deposit and not service tax, hence refundable. They cited precedents where limitation under Section 11B was held not applicable in similar cases. The appellant also claimed that unjust enrichment did not apply as they did not recover the service tax from the service recipient and the prices were firm, not affected by the tax levy.

The Assistant Commissioner rejected the refund claim, stating that the appellant was aware of their liability to deposit service tax, as evidenced by their invoices inclusive of service tax and declarations in ST 3 returns. The claim was also filed after more than a year from the tax deposit. The Commissioner (Appeals) upheld this decision.

However, the Tribunal found that the services provided by the appellant were not taxable, and the tax paid was a mistake, thus treated as a deposit eligible for refund. The Tribunal emphasized that the services rendered were not subject to service tax, reinforcing the refund entitlement. Moreover, the Tribunal held that the limitation under Section 11B was not applicable as the deposited amount was not tax but a revenue deposit, supported by a judgment of the Madras High Court.

Regarding unjust enrichment, the Tribunal noted that the prices were firm, not influenced by tax, and the appellant did not charge service tax in their invoices. Consequently, unjust enrichment was deemed inapplicable. The Tribunal allowed the appeal, directing the adjudicating authority to refund the amount with interest at 12% per annum from the end of three months from the refund application date. The decision highlighted the non-taxable nature of the services provided, the inapplicability of limitation under Section 11B, and the absence of unjust enrichment, leading to the allowance of the appeal and the refund order.