2023 (5) TMI 1023 - AT - Service Tax

Refund claim - doctrine of unjust enrichment - Period of limitation - freight inward and freight outward for the period pertaining to April 14 to March 2015 - service tax paid on transportation of Chemical Fertilizer from the different buyers and transported the same by Road to their Pulgaon Factory and the same type of transporting is Exempt Under Notification No- 25/2012 - HELD THAT - Undisputedly the refund claim has been filed by the appellant much beyond the prescribed period of limitation as per the Section 11 B of the Central Excise Act, 1944 as made applicable to the cases of Service Tax by Section 83 of the Finance Act, 1994. The finding recorded by both the authorities, on this aspect cannot be said to be perverse and should not be interfered with. The impugned order has relied upon series of the decision rendered in the matter by various authorities, which support the view taken. A part of refund claim has been rejected by the impugned order on the ground of time bar on the reasoning similar to one which was adopted. As it is upheld that impugned order there recording the finding on the issue of time bar which is identical in the present cases this order needs to be upheld on this issue. In case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT , a five judges bench of Hon ble Supreme Court has held that Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification and When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. In view of the decision of the Hon ble Apex Court, interpreting an exemption notification, in strict manner so as to deny inadmissible refund claimed in respect of service tax paid on the inward transportation service cannot be faulted with. Accordingly the impugned order to the extent it hold that refund claim in respect of inward transportation service is inadmissible cannot be faulted with. It is now settled law that all the refund claims need to be examined as per the provisions of the section 11B and it is for the claimant to establish that the burden of the tax paid has not been passed on to the consumer of the goods or services. In case the claimant fails to establish the same the refund even if admissible needs to credited to Consumer welfare Fund. Hon ble Supreme Court has in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has held that Where the petitioner-plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State. Both the authorities have after consideration of the facts on recorded have arrived at the finding that the burden of the tax claimed as refund has been passed on by the appellant to their consumers. The finding recorded by both the authorities, on this aspect cannot be said to be perverse and should not be interfered with. The impugned order has relied on the cost accountant certificate to hold that the burden of the tax paid has been built in the price to the end consumer. The cost accountant certificate supports the view taken. Once the burden of the tax paid has been passed on to the consumer, the admissible refund needs to be credited to consumer welfare fund as has been held in the impugned order. Appeal dismissed.

Summary

Issues Involved:
1. Time-barred refund claims.
2. Partial admissibility of refund claims based on merits and limitation.
3. Crediting admissible refunds to the Consumer Welfare Fund.

Detailed Analysis:

1. Time-barred Refund Claims:
The primary issue in Appeal No. ST/86554/2018 is whether the appellant's refund claim is time-barred. The Commissioner (Appeals) held that the refund claim was filed beyond the one-year limitation period as stipulated under Section 11B of the Central Excise Act, 1944, which is applicable to service tax by virtue of Section 83 of the Finance Act, 1994. The adjudicating authority and the Commissioner (Appeals) both upheld that the refund claim was filed after the statutory period, making it ineligible for consideration. The Tribunal cited various precedents, including the cases of Bajaj Foods Ltd. v. Commissioner and Benzy Tours and Travels Pvt. Ltd. v. CCE, Mumbai, to reinforce that refund claims filed beyond the prescribed period cannot be entertained. Consequently, the Tribunal dismissed the appeal, affirming that the refund claim was rightly rejected as time-barred.

2. Partial Admissibility of Refund Claims Based on Merits and Limitation:
Appeal Nos. ST/88153/2018 and ST/87126/2021 dealt with the partial admissibility of refund claims. The appellant had filed for refunds on service tax paid on freight for transportation of chemical fertilizers, claiming exemption under Notification No. 25/2012-ST as amended by Notification No. 03/2013-ST. The adjudicating authority partially sanctioned the refund claims but credited the sanctioned amounts to the Consumer Welfare Fund due to the appellant's failure to prove that the incidence of duty had not been passed on to the buyers. The Tribunal upheld the lower authorities' decisions, emphasizing that the refund claims for inward freight were inadmissible as the exemption notification applied only to outward freight. The Tribunal also reiterated that refund claims filed beyond the one-year limitation period were rightly rejected.

3. Crediting Admissible Refunds to the Consumer Welfare Fund:
The Tribunal examined whether the appellant had passed on the burden of service tax to the consumers. Based on the cost audit report and other documentary evidence, it was established that the appellant had indeed passed on the tax burden. As per the doctrine of unjust enrichment, the Tribunal held that any admissible refund should be credited to the Consumer Welfare Fund. This decision aligns with the principles laid out in Mafatlal Industries Ltd. v. Union of India, where the Supreme Court mandated that refunds should be credited to the Consumer Welfare Fund if the burden of tax has been passed on to the consumers. The Tribunal found no merit in the appeals and upheld the lower authorities' orders to credit the admissible refund amounts to the Consumer Welfare Fund.

Conclusion:
The Tribunal dismissed all the appeals, affirming the lower authorities' decisions. The refund claims were either time-barred or inadmissible based on the merits and limitation. Moreover, any admissible refunds were ordered to be credited to the Consumer Welfare Fund due to the passing of the tax burden to the consumers. The Tribunal's decisions were consistent with established legal principles and precedents, ensuring that statutory provisions were strictly adhered to.