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TMI Blog2022 (12) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of original works, the service provider has to pay only on 40% of the total amount charged for the works contract. The levy of service tax on such works is 40% of the total amount and has to be paid by the service provider only. The service provider had correctly issued invoices collecting service tax @ 40% on the consideration received by them. It is the case of the appellant that as the invoice showed only collection of tax on 40% of the consideration paid by them, they were under the impression that they have to pay service tax for the balance 60% of the consideration. Thus they paid tax on the balance 60% as their own liability. This has been clearly discussed by the original authority in para 6.1 of the order No.33/2015 dt. 31.08.2015. It is clearly brought out from evidence that appellant has paid the tax by mistake. Moreover, the original authority vide OIO No.34/2015 dt. 30.09.2015 has held that limitation will not apply as the tax has been paid by mistake - the rejection of refund claim on the ground of limitation is not sustainable. The second ground of rejection of refund is that the amount paid is hit by the doctrine of unjust enrichment - HELD THA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. - EXCISE APPEAL No.41832-41833 of 2016 - FINAL ORDER No. 40379-40380 / 2022 - Dated:- 20-12-2022 - Ms. Sulekha Beevi C.S., Member (Judicial) For the Appellant - Shri M.N. Bharathi, Advocate and Shri Jai Shankar, Advocate For the Respondent - Ms. K. Komathi, Additional Commissioner (AR) ORDER The issue in both these appeals being same and connected, they are heard together and disposed by this common order. 2. Brief facts of the case are that appellants are engaged in manufacture of MV parts and tools, implements of base metal and have also obtained service tax registration for discharging service tax as provider of services as well as recipient of services under reverse charge mechanism in respect of GTA, Legal services, Business Support Service, Works Contract Services etc. The appellant filed two refund claims for an amount of Rs.12,39,386/- and Rs.9,67,149/- for refund of service tax discharged by them on works contract services provided to them by M/s.SRC Projects Pvt. Ltd. and M/s.UR Ground Engineering Pvt. Ltd. The said companies undertook construction of some building activities and other civil structures for the appellant. It is the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or in goods and land or undivided share of land, as the case may be transferred in the execution of the said works contract. Explanation . - For the purposes of this clause,- (a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid or payable, if any, on transfer of property in goods involved in the execution of the said works contract; (b) value of works contract service shall include, - (i) labour charges for execution of the works; (ii) amount paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect s fees; (iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel used in the execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and (viii) profit earned by the service provider relatable to supply of labour and services; (c) where value added tax or sales tax has been paid or payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims being 31.03.2015 (one year from the date of paying service tax), refund claims filed on 07.04.2015 are barred by limitation. 3.4 The Ld. Counsel submitted that, when the tax itself is paid by mistake, the limitation envisaged in Section 11B of Central Excise Act, 1944 would not apply. In support of this argument, Ld. Counsel relied upon the decision in the case of 3E Infotech - 2018 (18) G.S.T.L. 410 (Mad.). It is further pointed out that the original authority had in fact accepted the contention of the appellant that the tax was paid under mistake and thereby refund claim in respect of Rs. 9,67,149/- was sanctioned. However, the amount was ordered to be credited to the Consumer Welfare Fund holding that the appellant has not been able to prove that the incidence of tax has not been passed on to another. 3.5 Ld. Counsel also adverted to para 6.1 of OIO dt. 31.03.2015 to argue that the original authority has categorically held that the amount of Rs.12,39,386/- has been paid by the appellant by mistake. The amounts having been paid by mistake, the limitation envisaged in Section 11B would not apply and the appellant is eligible for refund. 3.6 Further in SCN No.5/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f manufacture of their products should be treated as a part of the cost of the final products. In the instant case the Respondent in the Impugned Order has stated that the Appellant had failed to satisfactorily prove that the tax paid by mistake in connection with the construction service had not been considered as a part of their production overhead/factory overhead/manufacturing overhead under the cost accounting standards. Therefore without such explicit evidences, a mere certificate from a Chartered Accountant alone would not suffice to prove that the Appellant had crossed the bar of unjust enrichment as rightly held by the Respondent. Hence the two claims in dispute are hit by the bar of unjust enrichment. 4.2 It is argued by her that the appellant having availed services for construction of building, the tax paid goes into the capital assets and becomes included in the costing of the finished products manufactured by them. That therefore the incidence of tax has been passed on. Though the appellant has produced Chartered Accountant certificate they have not produced Balance Sheet to prove that the amount has been maintained as receivable in their balance sheet. The deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be answered are whether their claim for refund satisfies all the substantive and procedural conditions prescribed under section 11B of the Central Excise Act, 1944 to allow their claim for refund .. From the above, it can be seen that there is an observation by the original authority in both the orders that the tax has been paid by mistake. However, the Commissioner (Appeals) in para-7 has summarily held that refund claim is hit by limitation without discussing the aspect whether the tax amount has been paid by mistake. 8. In the present case, it has to be noted that as per Rule 2A of Service Tax (Determination of Value) Rules, 2006, the extract of which has already been reproduced in para 3.1 above; in the case of works contracts which is in the nature of original works, the service provider has to pay only on 40% of the total amount charged for the works contract. The levy of service tax on such works is 40% of the total amount and has to be paid by the service provider only. The service provider had correctly issued invoices collecting service tax @ 40% on the consideration received by them. It is clear from the invoice, a scanned copy of which is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable. We accordingly allow the present appeals and quash and set aside the impugned order, insofar as it is against the appellant in both appeals. We fully allow refund of Rs. 8,99,9621/- preferred by the appellant. We direct that the respondent shall refund the amount of Rs. 8,99,962/- to the appellant within a period of three months. There shall be no order as to costs. 12 . Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law. 13 . On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These sections are reproduced below : SECTION 12A. Price of goods to indicate the amount of duty paid thereon . - Notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating to assessment, sales invoice, and other like documents, the amount of such duty which will form part of the price at which such goods are to be sold. SECTION 12B. Presumption that the incidence of duty has been passed on to the buyer. - Every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such duty to the buyer of such goods. 11. In the instant case, the disputed tax has been paid by the service recipient. He has paid it directly and has neither collected the amount nor issued any invoice. Further, when the amount of tax is held to be paid under a mistake, it cannot be said that the tax was paid under the Finance Act, 1994. It was an amount which was paid without having a liability to pay. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to the petitioner to produce documentary evidence in support of its claim that there was no unjust enrichment, the adjudicating authority was not justified in holding that there was unjust enrichment. Therefore, the finding that the petitioner s claim is hit by unjust enrichment cannot be legally sustained. 14. In the case on hand, the department does not dispute the veracity of the certificate, but merely denies the refund stating that appellant has to produce further documents. The Chartered Accountant who has issued the certificate has stated that he has examined the statutory records of the assessee-appellant. Taking into consideration, that the amount was paid by mistake, an no invoice was issued, I am of the view, that rejecting the said certificate in toto so as to hold that the incidence of duty has been passed on cannot be legally sustained. In the result, I hold that the appellant has succeeded in establishing that the amount is not hit by the doctrine of unjust enrichment. The appellant is eligible for refund. 15. In the result, the impugned order is set aside. The appeals are allowed with consequential reliefs, if any. (Pronounced in open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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