Whether issuance of credit note sufficient to claim refund?

PJ/Case Law /2016-17/3227

Case:-MEN POWER SECURITY AGENCIES VERSUSCOMMISSIONER OF C. EX. & S.T., MEERUT

Citation:- 2016 (43) S.T.R. 316 (Tri. - Del.)

Brief Facts:-The brief facts are that the appellant provided security agency service to M/s Ashok Hall Girl’s Residential School and also collected the service component from the recipient of the service. In view of this clarification on immunity to Service Tax, appellant submitted a claim for refund of the Service Tax remitted by it. On 20-3-2015 the appellant claimed refund of Rs. 2,48,600/- of the Service Tax earlier collected from the school but which component of Service Tax was reversed by the service recipient in the ledger maintained. The primary authority rejected appellant’s claim for refund on the ground of unjust enrichment alone. The impugned order also rejected the appeal notwithstanding the appellate authority noticing that the appellant had produced copies of ledger accounts of the school during the course of personal hearing.

Appellant’s Contention:-The appellant is a proprietary concern which provided security agency service to M/s. Ashok Hall Girls’ Residential School. Along with remuneration for rendition of such services, the appellant also collected the service component from the recipient of the service. The recipient school had a running account with the appellant where under the school was remitting the consideration for the security agency services received, along with the Service Tax component incurred by the appellant for remittance of tax on the taxable services provided. However, the service tax component was reversed by the service recipient in the ledger maintained by it. Copy of the relevant ledger of M/s. Ashok Hall Girls’ Residential School dated 20-3-2014 wherein the school reflects debit of Service Tax of Rs. 2,48,600/- from the consideration payable to the appellant.

Respondent Contention:-ld. AR for the Revenue contended that the Central Board of Excise and Customs Circular dated 19-9-2013 clarified that in terms of Notification No. 25/2012-S.T., dated 20th June, 2012 enumerating exemptions provided to educational institution in respect of certain services for the period subsequent to introduction of the negative list, auxiliary services provided to educational institutions are exempt from the levy of Service Tax. In view of this clarification on immunity to Service Tax, appellant submitted a claim for refund of the Service Tax remitted by it. On 20-3-2015 the appellant claimed refund of Rs. 2,48,600/- of the Service Tax earlier collected from the school but which component of Service Tax was reversed by the service recipient in the ledger maintained by it. The primary authority rejected appellant claim for refund on the ground of unjust enrichment.

Reasoning of Judgment:-The appellant had produced the ledgers maintained by the recipient of services, M/s. Ashok Hall Girl’s Residential School vide the entry dated 28-3-2014 in the ledger, which clearly records debit of Rs. 2,48,600/- earlier credited to the appellant towards Service Tax. Thus the component of Service Tax earlier borne by the service recipient and passed on by the appellant, stood reversed by the school and stood debited from the consideration due to the appellant from the school. In the circumstances, the appellant is seen to have clearly established that there is no unjust enrichment. Since unjust enrichment was the sole ground for denial of refund and that is not found to exist in the facts and circumstances of this case, the appellant is entitled to refund amount of 2,48,600.
In view of the above findings, the appeal is allowed.

Decision:-The appeal is accordingly allowed.

Comment:-The gist of the case is that refund claim cannot be denied on the grounds of unjust enrichment if the service tax component collected earlier is refunded back to the service receiver. In the present case, as the ledger account clearly reflected that burden of service tax component has not been passed on, the refund claim was allowed.

Prepared by:- Bharat Chouhan

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PJ/Case Law /2016-17/3227

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