Refund claim of service tax erroneously paid by availing cum tax benefit is not hit by bar of unjust enrichment.

PJ/Case Laws/2012-13/1494

Case:-COMMISSIONER OF SERVICE TAX, AHMEDABAD Versus SUN-N-STEP CLUB LTD.

Citation:- 2013 (29) S.T.R. 521 (Tri.-Ahmd.)

Brief Facts:- This appeal is filed by the Revenue against Order-in-Original No. STC/ 13/COMMR/AHD/2010, dated 31-8-2010, passed by the commissioner as a revisionary authority under Section 84 of Finance Act, 1994.The issue, in brief, is regarding sactioning of refund to the appellant on the Service Tax paid by him on the entry fee charged to non-members into the club. The respondent herein has filed the refund claim for the amount paid by him mistackenly on the amount collected from non-members. The adjudicating authority, on a refund claim filed by the appellant, issued a Show Cause Notice for rejection of the claim on adjudication and dropped the proceedings initiated by Show Cause Notice and allowed the refund. Ld. Commissioner, as a revisionary authority under Section 84 of Finance Act, 1994 reviewed the said order of the adjudicating authority and issued another Show Cause Notice to the appellant, indicating him about the revision of such an order. The respondent replied to the Show Cause Notice and appeared before the revisionary authority and contested the issue. The revisionary authority came to the conclusion that the respondent is eligible for refund claim of Service Tax paid by him under the mistaken identity of the law. Revenue is aggrieved by such an order. Revenue’s ground of appeal in this case are limited only to the two points which are reproduced herein below:-
“The assessee service provider has submitted the details of card-room income from club members and non-members under their letter dated 24-12-2007. The details submitted by the service provider indicate that the charges collected by them from members and non-members are inclusive of Service Tax. Thus, gross amount collected from clients is inclusive of Service Tax and it is clear that the Service Tax has been collected from client.
“The adjudicating authority has also observed that the service provider has paid the Service Tax out of gross amount collected from the clients. This clearly indicates that the gross amount collected from the client was inclusive of Service Tax. Thus, the doctrine of unjust enrichment in terms of provision of Section 12B of Central Excise Act, 1944 as made applicable to Service Tax vide Section 83 of Finance Act, 1994, would be applicable to the facts of the present case.”
Reference was also made to Section 73A (2) of Finance Act, 1994, which reads as follows:
“Whether 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 , such person shall forthwith pay the amount so collected to the credit of the Central Government.”

Appellant Contentions: Ld. DR would emphasize upon the fact that there is an unjust enrichment in this case as the respondent has worked back the Service Tax liability and deposited the same , which would indicate that the respondent has collected the amount from the non-members also.

Respondent Contentions: Ld. Counsel appearing for the respondent would submit that the adjudicating authority, in his Order-in-Original, has specifically recorded the finding “copy of the invoice reflects that there is no Service charge and consequently receipt of non-membership income is without Service Tax.” It is submission that against such a categorical factual finding recorded by the adjudicating authority, there is no contrary evidence produced by the department. It is also his submission that in an identical set of facts in respect of another assessee, the Division Bench of the Tribunal in that case of V.S. Infrastructure Ltd. -2012(25) S.T.R. 170(Tri.-Del.), had held that the question of unjust enrichment does not arise. A regard s invocation of Section 73A of Finance Act, 1994, it is his submission that the said provision can be invoked only when the amount is charged as Service Tax liability and in this case there is no charge as the amount has been paid by him working back from the amount received from the non-members.
Reasoning of judgment:- Tribunal has considered the submission from both the parties and perusal of the records, they find that there is no dispute that the respondent has paid an amount as Service Tax liability on the income received from the non-members, working backwards the Service Tax liability. Tribunal finds that the adjudicating authority, as correctly pointed out by the ld. Counsel, has recorded a factual finding that the respondent has not charged Service Tax on any of the amount which has been charged by him to the non-members. Both the lower authorities have held that the respondent is not liable to discharge the Service Tax liability on the non-members under the category of Club & Association Services. Tribunal finds strong force in the contention raised by the ld. Counsel that the respondent’s issue is not hit by unjust enrichment. It is his submission that the Tribunal’s decision in the case of V.S. Infrastructure Ltd.(supra) had held as follows:
The above Companies certified that the amounts of commission paid to the Respondent was inclusive of all statutory levies and they were under no obligation to pay Service Tax over and above the amount paid as Commission. It is the argument of the Respondent that it had borne the incidence from the total amount paid by Asset Management companies and, therefore, there was no question of passing on incidence of Service Tax. The Commissioner (Appeals) agreed with the contention of the Respondent and ordered refund of the amount claimed by the Respondent. The main argument on behalf of the department is that the amount paid by them was inclusive of all taxes and levies including Service Tax, it has to be understood that the incidence of Service Tax has been passed on to the Asset Management Companies and refunding such tax could result in unjust enrichment to the Respondent.
It can be seen from the above reproduced judgment that the question of unjust enrichment in this case may not arise, as facts are similar and this case is squarely covered by the ratio, in favour of the assesee. As regards the provisions of Section 73A of Finance Act, 1994, Tribunal finds that when there is no invoice raised or issued for collection of an amount as Service Tax, the question of depositing the same with the government does not arise. In sum, due to foregoing reasons and in the facts and circumstances of this case, Tribunal finds no merit in the appeal filed by the Revenue. The appeal is rejected.

Decision:-The appeal filed by the revenue is rejected.

Comment:-The substance of this case is that when there was no service tax liability on part of the assessee and the assessee had paid service tax be treating the receipts as cum-tax, the bar of unjust enrichment cannot be held to be applicable as nothing was collected as service tax from the customers.

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PJ/Case Laws/2012-13/1494

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