2025 (3) TMI 843 - AT - Service Tax

Rejection of refund claim on the ground of being time barred - refund being filed beyond a period of one year from the date of payment of service tax - appellant has not filed any ST-3 returns nor even with the impugned claim - principles of unjust enrichment. Principles of unjust enrichment - HELD THAT - It becomes clear that the amount in question does not relates to service tax liability of the appellant but got collected erroneously as representing service tax. Such amount should be refunded even without application of the provisions relating to unjust enrichment. Support drawn from the decision of the principal bench of this tribunal in the case of Hexacom Vs. Commissioner of Central Excise Jaipur 2003 (6) TMI 2 - CESTAT NEW DELHI . It is also observed that the amount in question since was deposited on 31.03.2009 towards the sale of SIM cards of financial year 2008-09 the tax was paid after the said activity of sale hence the issue of unjust enrichment of appellant does not otherwise arise. Rejection of refund claim on the ground of being time barred - HELD THAT - Section 11B of Central Excise Act 1944 read with section 83 of Finance Act 1994 makes it abundantly clear that if the refund claim is filed pursuant to a judgement / order the period of one year to file refund claim shall start from the date of said judgement / order. As already observed above that the Order-in-Original dated 22-07.2021 has dropped the service tax demand holding no service tax liability of the appellant the refund claim filed on 24.09.2021 is therefore well within one year of the period of limitation as prescribed under section 11B of Central Excise Act 1944 explanation B(ec) read with section 84 of Finance Act 1994. In the light of this discussion it is held that the adjudicating authority below has erred in ignoring the earlier order passed by the department in favor of the present appellant. Lack of evidence as a ground of rejection of present refund claim - HELD THAT - The authorities below have opined that due to non-availability of ST-3 returns it cannot be confirmed that the amount as deposited by the appellant was meant for providing the services for which the demand was dropped vide order dated 22.07.2021. However it has been settled that the activity of sale of SIM cards does not invite any service tax liability on the amount of commission / incentive received for rendering such activity. The question of any service tax liability and filing of ST-3 returns become redundant. The appellant apparently was not registered earlier with the service tax department. It was only when department asked the appellant to get registration and to deposit service tax that the appellant took registration at the end of financial year 2008-09 and deposited the proposed amount for the said financial year. The impugned show cause notice proposed the demand for the period including 2008-09 to financial year 2011-12. Hence this ground of rejection of impunged refund claimed is factually incorrect. Conclusion - i) The refund claim is not time-barred as it is filed within one year of the Order-in-Original that nullified the service tax demand. ii) The appellant is not unjustly enriched and the refund should be granted. iii) The lack of ST-3 returns does not invalidate the refund claim as the service tax demand for the relevant period was already dropped. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment were:

• Whether the refund claim filed by the appellant was time-barred under Section 11B of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994.
• Whether the appellant's refund claim was unjustly enriched, thereby preventing a refund.
• Whether the absence of ST-3 returns invalidated the refund claim due to a lack of evidence linking the deposited amount to the dropped service tax demand.

ISSUE-WISE DETAILED ANALYSIS

Time-Barred Refund Claim

• Relevant Legal Framework and Precedents: The refund claim was analyzed under Section 11B of the Central Excise Act, 1944, which stipulates that a refund claim must be filed within one year from the "relevant date." The explanation to Section 11B defines the "relevant date" as the date of the judgment, order, or direction that makes the duty refundable.
• Court's Interpretation and Reasoning: The Tribunal interpreted the "relevant date" to be the date of the Order-in-Original dated 22.07.2021, which dropped the service tax demand against the appellant. Thus, the refund claim filed on 24.09.2021 was within the one-year limitation period.
• Conclusions: The Tribunal concluded that the refund claim was not time-barred as it was filed within one year of the Order-in-Original that nullified the service tax demand.

Unjust Enrichment

• Relevant Legal Framework and Precedents: The principle of unjust enrichment prevents a refund if the claimant has passed the tax burden onto another party.
• Court's Interpretation and Reasoning: The Tribunal reasoned that the amount in question was deposited after the sale of SIM cards, meaning the appellant did not pass the tax burden onto customers. The Tribunal referenced the decision in Hexacom Vs. Commissioner of Central Excise, Jaipur, which supports refunding erroneously collected amounts without applying unjust enrichment provisions.
• Conclusions: The Tribunal determined that the appellant was not unjustly enriched, and the refund should be granted.

Lack of Evidence Due to Absence of ST-3 Returns

• Relevant Legal Framework and Precedents: The absence of ST-3 returns was initially considered a barrier to confirming that the deposited amount was related to the dropped service tax demand.
• Court's Interpretation and Reasoning: The Tribunal found that the appellant's activity of selling SIM cards did not incur service tax liability, and thus the absence of ST-3 returns was irrelevant. The Tribunal noted that the appellant registered and deposited the amount only after the department's directive.
• Conclusions: The Tribunal concluded that the lack of ST-3 returns did not invalidate the refund claim, as the service tax demand for the relevant period was already dropped.

SIGNIFICANT HOLDINGS

• Core Principles Established: The Tribunal established that the "relevant date" for refund claims under Section 11B is the date of the order nullifying the tax demand. It also reinforced that amounts collected erroneously as service tax should be refunded without applying unjust enrichment provisions if the tax burden was not passed on.
• Final Determinations on Each Issue: The Tribunal set aside the order rejecting the refund claim, determining that the claim was filed within the permissible time frame, the appellant was not unjustly enriched, and the absence of ST-3 returns was not a valid ground for rejection.

The Tribunal's decision emphasized the importance of adhering to statutory definitions of "relevant date" for refund claims and underscored the necessity of consistency in judicial decisions concerning similar factual scenarios, as highlighted in the Vishnu Traders case. The appeal was allowed, and the order rejecting the refund claim was set aside.