2024 (1) TMI 675 - AT - Service Tax

Refund claim - pre-deposit made by the assessee is hit by unjust enrichment or not - HELD THAT - It is settled position in law that amounts which were deposited during the course of investigation were paid subsequently by the provider of the service, hence, could not have been based on to the service recipients. The expenses incurred subsequently in form of deposit made during the course of investigation are shown as revenue expenditure in the balance sheet of the respondent, as this amount has been shown as revenue expenditure in the balance sheet the same would justify the claim of the respondent. In case of M/S JAGETI CO. VERSUS CST AHMEDABAD 2011 (12) TMI 111 - CESTAT, AHMEDABAD tribunal has held In any case, it has been paid under protest and the expenditure is booked. This does not mean that what was paid before issue of Show Cause Notice was subsequently collected from the customers. Hon ble Allahabad High Court in the similar situations in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S ADVANCE STEEL TUBES LTD. 2018 (3) TMI 627 - ALLAHABAD HIGH COURT has held The department was not justified in applying the bar of unjust enrichment to the remaining amount of ₹ 10,34,880/- without there being any cogent material or evidence to support it and without the department having considered the cost structure of goods for that amount. Since the issue is squarely covered by the above referred decision of Hon ble Jurisdictional High Court, there are no merits in this appeal filed by the revenue - appeal dismissed.

Summary

Issues Involved:
1. Applicability of the bar of unjust enrichment.
2. Entitlement to interest on the refund amount.
3. Validity of the refund claim.

Summary:

1. Applicability of the Bar of Unjust Enrichment:
The Commissioner (Appeals) held that the bar of unjust enrichment does not apply to the instant case. The amount paid during the investigation was considered a deposit under protest and not a tax liability. The Hon'ble CESTAT, Allahabad, set aside the demand confirmed against the appellant, and the appeal of the respondent department against the said order was dismissed by the Hon'ble Supreme Court. Therefore, the appellant became entitled to the amounts deposited during investigations along with applicable interest. The amounts deposited were not towards any tax liability but were merely a deposit with the department. The Commissioner (Appeals) relied on various judgments, including those of the Hon'ble High Court of Allahabad and the Hon'ble Supreme Court, to conclude that the principles of unjust enrichment would not apply to deposits made during investigations.

2. Entitlement to Interest on the Refund Amount:
The appellant was entitled to interest on the delayed refund. The order confirming the demand was appealed against before the Hon'ble CESTAT, which set aside the same. The appellant was required to make deposits in terms of Section 35F of the Central Excise Act, 1944, as applicable to Service Tax matters. The appellant was entitled to interest in terms of Section 35FF of the Central Excise Act, 1944, from the expiry of three months from the date of communication of the Hon'ble CESTAT's Final Order until the actual payment of the refund.

3. Validity of the Refund Claim:
The Assistant Commissioner, Central Goods & Services Tax, Ghaziabad, had initially sanctioned the refund claim but ordered to credit the same to the 'Consumer Welfare Fund' under Section 11B(2) of the Central Excise Act, 1944. The Commissioner (Appeals) found that the amounts were deposited during investigations on the insistence of the department and were in the nature of a deposit under protest. The principle of unjust enrichment was not attracted. The Commissioner (Appeals) also noted that merely because the amount was shown as expenditure in the appellant's Profit and Loss Account, it could not be contended that the pre-deposit made by the assessee was hit by unjust enrichment. The Commissioner (Appeals) relied on the judgment of the Hon'ble CESTAT, Hyderabad, in a similar matter, which held that deposits made during investigations are not hit by unjust enrichment.

Conclusion:
The appeal filed by the revenue was dismissed, and the appellant was entitled to the refund along with interest. The amounts deposited during the investigation were considered deposits under protest, and the principles of unjust enrichment did not apply. The appellant was also entitled to interest on the delayed refund from the expiry of three months from the date of communication of the Hon'ble CESTAT's Final Order until the actual payment of the refund.