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TMI Blog2019 (6) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in dispute that on the application filed by the Appellant for refund of this amount, the adjudicating authority did sanction the refund of ₹ 1,11,36,840/- but it directed the said amount to be deposited in the Consumer Welfare Fund because of the principles of unjust enrichment. This Order was upheld by the Commissioner(Appeals) for the same reason. This view is apparently contrary to the consistent view of the High Courts and the Tribunal. The Appellant would, therefore, be clearly entitled to the refund of ₹ 1,11,36,840/-. Amount collected but not deposited to the Government - Applicability of Sections 73A and 73B of the Act - recovery of the amount - HELD THAT:- Section 73 A of the Act which came into effect from 18 April 2006, provides a complete answer to this issue. Section 73 A deals with service tax collected from any person to be deposited with Central Government. While sub-section (1) deals with service tax collected in excess of the service tax assessed or determined, sub-section (2) deals with any person who has collected any amount which is not required to be collected from any other person, in any manner as representing service tax. Sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation services between 16 July, 2001 and 6 October, 2003 and even though it had received service tax for rendering taxable service to the clients but it had not discharged the service tax liability. The Appellant was, therefore, called upon to pay service tax. 4. The Appellant submitted a reply mentioning therein that the services rendered by the Appellant would fall under the category of Commercial Training and Coaching but computer coaching centres were exempted from payment of service tax. It was also stated that they were not liable to pay service tax but they were forced to pay service tax during investigation which should not be treated to mean that they were in agreement with the contention of the Department that they were liable to pay service tax. The adjudication officer did not accept the contentions of the Appellant and confirmed the demand and recovery of service tax. However, the amount of ₹ 1,11,36,840/- that had been paid at the time the search was conducted was directed to be appropriated towards the demand of service tax. 5. This Order of the adjudicating authority was challenged in Appeal before the Tribunal. The Tribunal exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax had not been collected from the customers, the question of unjust enrichment did not arise. 9. The adjudication officer, however, did not accept the contention of the Appellant regarding unjust enrichment being not applicable and, therefore, while sanctioning the refund of ₹ 1,11,36,840/- directed that it should be credited to the Consumer Welfare Fund under Section 11B(2) of the Act. 10. It is against this Order dated 31 March, 2011 that the Appellant filed an Appeal before the Commissioner(Appeals), which Appeal was rejected and the Order passed by the adjudicating authority was upheld. This Order dated 29 April, 2013 of the Commissioner(Appeals) has been assailed in this Appeal. 11. Ms. Shagun Arora, learned Counsel for the Appellant strenuously urged that the Commissioner(Appeals) committed an error in directing that the amount claimed by the Appellant should be deposited in the Consumer Welfare Fund after sanctioning it for the reason that not only had the Appellant not collected any service tax from the customers but even otherwise the question of unjust enrichment does not arise if any amount is deposited during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax and why penalty should not be imposed and interest should not be charged. The demand made in the show cause notice was confirmed by the Adjudicating Officer but in the Appeal filed by the Appellant before the Tribunal, the Order was set aside and the Appeal was allowed. 15. It is as a consequence of the Order passed by the Tribunal on 25 August, 2008 that the Appellant filed an application claiming refund of ₹ 1,11,36,840/- on 21 May, 2009. The Department, however, issued a show cause notice dated 23 March, 2010 to the Appellant to explain why the refund claim should not be rejected. The Appellant filed a reply. The Assistant Commissioner by Order dated 31 March, 2011 sanctioned the refund of ₹ 1,11,36,840/- but directed it to be credited in the Consumer Welfare Fund on account of unjust enrichment. 16. The contention of learned Counsel for the Appellant is that no service tax had been collected by the Appellant from the consumers and, therefore, the question of unjust enrichment does not arise at all. Elaborating this submission, it has been contended that the Appellant had only collected service charges for the administrative servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The relevant portion of the Judgement of the High Court is reproduced below: 7. The first question of law, which is raised, relates to the plea of unjust enrichment and much emphasis is laid on the decision of the Supreme Court in Mafatlal Industries case (1997 (89) ELT 247 (SC) ). Relevant portion of the order passed by the Supreme Court in Mafatlal Industries case (supra) has been extracted in the grounds (b) and (c). There is no dispute with regard to the proposition of law as laid down by the Supreme Court. In the present case, as is evident from the records, it is not a case of refund of duty. It is a pre-deposit made under protest at the time of investigation, as has been recorded in the original proceedings itself. In this regard, it has to be noticed it has been the consistent view taken by the Courts that any amount, that is deposited during the pendency of adjudication proceedings or investigation is in the nature of deposit made under protest and, therefore, the principles of unjust enrichment does not apply. The above said view has been reiterated by the High Court of Bombay in Suvidhe Ltd. v. Union of India (1996 (82) ELT 177 (Bom.)) , and by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court examined the provisions of Section 11AB of the Central Excise Act which contemplates that the amount shall be refunded to the assessee provided the incidence of such duty had not been passed on by him to any other person. The Allahabad High Court held that any amount deposited during the pendency of the adjudicating proceedings or investigation is in the nature of a deposit under protest and, therefore, the principles of unjust enrichment would not be attracted. In coming to this conclusion, the Allahabad High Court placed reliance upon the decision of the Madras High Court in Pricol Ltd. 19. The aforesaid decisions of the Madras High Court and the Allahabad High Court in Pricol Ltd. and EBIZ. Com Pvt. Ltd. were followed by the Allahabad High Court (Lucknow Bench) in Commissioner of Central Excise, Lucknow Vs. Eveready Industries India Ltd. [2017 (357) ELT 11] 20. This issue was also examined by the Tribunal in Motorola India Pvt. Ltd. The Tribunal upheld the view of the Commissioner(Appeals) that the power of unjust enrichment would not be applicable for refund of an amount deposited during investigation and the relevant paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Appellant for refund of this amount, the adjudicating authority did sanction the refund of ₹ 1,11,36,840/- but it directed the said amount to be deposited in the Consumer Welfare Fund because of the principles of unjust enrichment. This Order was upheld by the Commissioner(Appeals) for the same reason. This view is apparently contrary to the consistent view of the High Courts and the Tribunal. The Appellant would, therefore, be clearly entitled to the refund of ₹ 1,11,36,840/-. 23. An important issue, however, will arise and which needs to be examined. This concerns the allegation of the Department that the Appellant had collected service tax from the consumers during the period in question but had not deposited it with the Government. Though the Appellant has vehemently contended that only service charges were collected towards administrative expenses from the consumers and no service tax had been collected from the consumers but this is an issue that is required to be examined in appropriate proceedings because if the Appellant had actually collected service tax then it cannot be permitted to retain it. 24. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice was not issued to the Appellant under sub-section (3) of section 73A of the Act and, therefore, this amount cannot be recovered from the Appellant. 28. It shall, therefore, be open to the Department to proceed strictly in accordance with the provisions of Sections 73A and 73B of the Act to recover the amount alleged to have been collected by the Appellant as service tax after issuance of a show cause notice. The Appellant shall be given an adequate opportunity to substantiate its case that it had not collected service tax but had only collected service charges . A decision shall, thereafter, be taken without being influenced by any of the findings recorded in any Order passed earlier in the case of the Appellant. 29. The Order dated 29 April, 2013 passed by the Commissioner (Appeals) is, accordingly, set aside but is left open to the Department, if so advised, to take recourse to sections 73A and 73B strictly in accordance with law. The Appeal is allowed to the extent indicated above. The application filed by the Appellant for refund is allowed and the amount of ₹ 1,11,36,840/- shall be refunded to the Appellant within two months. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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