2019 (2) TMI 1424 – CESTAT MUMBAI – TMI – Refund of Service Tax erroneously under Reverse Charge Mechanism – unjust enrichment – Held that:- The test of unjust enrichment, in its limited applicability, is confined to the consideration as to who had borne the incidence of tax? If it is borne by the appellant and not passed on to any other person, then appellant cannot be regarded as being enriched with the refund of such tax component borne by any other person.
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In the instant case, going by the service commission agreement – calculation is given as: “CIF price to customer minus CIF price to Godrej” and the service commission calculation has been reached at a certain amount, as found from simple agreement copies placed at page no. 130 & 131 of the appeal memo – Chartered Accountant also had furnished the certificate indicating non-realisation of tax component from the service receiver – The appellant’s claim that it had paid the Service Tax under the erroneous belief that as per R
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cturing Co. Ltd. claimed refund recalculated as ₹ 19,66,794/- for the period from April 2008 to September 2008 on commission received for export of services from a Singapore based company M/s Komatsu Asia Pvt. Ltd. against sale and services of its trucks in India. Appellant s claim to have paid the Service Tax erroneously under Reverse Charge Mechanism but after the Board issued Circular dated 24.02.2009 clarifying such services to be treated as export of services, appellant realised that such payment of Service Tax was erroneously made and sought for refund on 22.04.2009 for an amount of ₹ 23,86,416/- which was recalculated as ₹ 19,66,794/- along with copies of relevant documents but was issued with show-cause notice dated 23.12.2010 as to why such refund was not to be rejected. Matter was adjudicated, refund was refused but subsequently allowed by the Commissioner (Appeals) before whom appellant challenge the adjudication order. The relevant extract of the order of
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n above terms with consequential relief, if any. 3. Appellant complied with the orders, appeared before the Assistant Commissioner of Service Tax, Division-I, Mumbai-VII and participated in the personal hearing, who vide his order dated 28.10.2016, made some adverse observation on the merit of the case and keeping himself bound by the direction of the Commissioner (Appeals), as a matter of judicial discipline, examined unjust enrichment aspect and gave his findings, the relevant portion of which is summarised below:- (ii) Now as per Commissioner (Appeals) direction, I look into the matter of applicability of doctrine of unjust enrichment in the instant refund claim. The claimant has submitted that the provision of unjust enrichment do not apply in the instant refund claim. They submitted that the refund claim is in respect of the amount of Service Tax wrongly paid by them on commission received by them from their overseas clients, under reverse charge. I find the above claim made by th
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foreign customer. The claimant claims that they merely worked back from the said commission amount of Service Tax liability to be discharged by them under reverse charge and paid the said Service Tax amount from the actual service commission received by them. I find that once the invoice or bill has been drawn, it is sufficient to presume that the incidence of duty/service tax has been passed on. Further there is no provision in the law for the actual realization. For this proposition, I rely on the decision of Hon ble Tribunal in case of M/s Mukand Ltd. Vs. CCE, Mumbai-VI reported in 2004-TIOL-1166-CESTAT-Mumbai. The Tribunal further in para 3 & 4 held that – 3. ………. once the invoice or bill has been drawn, it is sufficient to presume that the incidence of duty/service tax has been passed on ……………….. 4. Therefore, I do not find any substance in the argument of the ld. Counsel that there was no actual receipt of the Service Tax by the appellant. I find no merits
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of the facts and documents discussed in the foregoing paras. Further the CA certificate alone cannot prove that the incidence of duty/tax has not been passed to the customers. For this proposition, I rely on the decision of Hon ble Tribunal in case of CCE, Chennai-II Vs. M/s Caterpillar India Pvt. Ltd. reported in 2009 (246) ELT 725 (Tri.-Chennai), wherein the Tribunal in para 5 held that- ……………we find force in the contention of the Revenue that Chartered Accountant s certificate was not sufficient and that the Commissioner (Appeals) wrongly held that the grant of refund for the period 2/01 to 4/01 was free from the vice of unjust enrichment. Further the certificate issued by the customer does not mention details of bills where they have paid only the commission amount and not the Service Tax. In view of the above, the certificate issued by the customers is of no use to the claimant. 11. The claimant has also argued that the provisions of Section 11B of the Central Excise Act
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dy been passed to the clients/third party. 4. Being aggrieved by the above rejection order, appellant preferred on appeal before the Commissioner (Appeals) and as the same yielded no fruitful result, it has approach this Tribunal seeking relief in this second round of litigation. 5. In the memo of appeal and during the course of hearing of the appeal, learned Counsel for the appellant Mr. K.A. Photographer, Associate Vice President, apart from arguing on the merit of the case, pleaded that provisions of unjust enrichment do not apply to export of services and the Service Tax was paid erroneously after deducting the tax component from the whole of commission amount received by the appellant and for the purpose of calculation only, they prepared invoice in the ERP system, with bifurcation of tax component but going by the Service Commission Agreement, annexed at page 130 & 131 of the appeal memo and Foreign Inward Remittance certificate received from the bank, it is crystal clear the
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(India) Ltd. were all in favour of appellant, for which he prayed to set aside the order of the Commissioner (Appeals). 6. In response to such submissions, Shri Dilip Shinde, learned Assistant Commissioner (AR) for the respondent-department has supported the reasoning and rationality of the order passed by the Commissioner (Appeals) and brought the attention of this court to the decision reported in 2018-TIOL-1811-CESTAT-BANG wherein, placing reliance on amendment made to Section 86 of the Finance Act, 1994, finding has been given that such rebate claim is not maintainable in the Tribunal which is supposed to be dealt by the Revisionary Authority. For which he sought no interference in the order passed by the Commissioner (Appeals). 7. Heard from both sides at length and perused the case records. When jurisdiction of Tribunal is challenged the same is required to be answered first before devolving into merit of the appeal. When the first refund claim was filed, it was filed on the gro
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department. Therefore, determination of such an issue is well within the jurisdiction of this Tribunal for which hearing had been rightly preceded. 8. The test of unjust enrichment, in its limited applicability, is confined to the consideration as to who had borne the incidence of tax? If it is borne by the appellant and not passed on to any other person, then appellant cannot be regarded as being enriched with the refund of such tax component borne by any other person. In the instant case, going by the service commission agreement – calculation is given as: CIF price to customer minus CIF price to Godrej and the service commission calculation has been reached at a certain amount, as found from simple agreement copies placed at page no. 130 & 131 of the appeal memo. Chartered Accountant also had furnished the certificate indicating non-realisation of tax component from the service receiver. The appellant s claim that it had paid the Service Tax under the erroneous belief that as p
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emo) under para 8 (iii) had given his observation that it was for the appellant to change/amend their CIF system to make it complacent as per their requirement and they have not done so. Further, when the service receiver denied to have born the incidence of tax, it is not understood as to why the same was not found believable by the Adjudicating Authority and placing reliance on this Tribunal judgment in M/s Mukund Ltd. Vs. CCE, Mumbai-VI reported in [2004-TIOL-1166- CESTAT-MUMBAI as well as decision of Tribunal in the case of CCE, Chennai-II Vs. M/s Caterpillar India Pvt. Ltd. reported in 2009 (246) ELT 725 (Tri.-Chennai) which were given on altogether different factual context, the Adjudicating Authority had rejected the claim. It appears that Adjudicating Authority and Appellate Authority had drawn adverse inference to the bonafideness of the appellant who consider it their burdened duty to pay Service Tax under Reverse Charge Mechanism which was infect not payable as per clarifict
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