The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the final buyer of goods/recipient of service is entitled to a refund of tax, if any that is due.
On November 4, 2016, the appellant/assessee, K. Ramani, paid service tax to the government account through M/s. Vedanta Brindhavan Senior Citizens Welfare and Service Trust, Coimbatore, in the amount of the “senior living fee.” The appellant said that he was entitled to a refund since he had not received any setoff or provided any services to the Trust and that the payment of the sum was an error in law. The refund claim was denied by the Original Authority due to undue enrichment and limitation. In front of the Commissioner (Appeals), the appellant filed an appeal, which the commissioner denied.
According to the tribunal, money that was wrongly paid as service tax may be refunded in line with Section 11B of CEA 1944, which is relevant to service tax under Section 83 of the FA 1994.The question that was brought up was whether the Trust alone could get the refund and not a person who had really paid the tax.
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The appellant/final buyer, not the Trust, is the one who bears the ultimate incidence of the tax and is therefore able to receive the refund and is not prohibited from doing so, according to the single bench of M. Ajit Kumar (Technical Member). Since the sum was paid out of the appellant’s personal funds and hasn’t been proven to have been passed on, the issue of unjust enrichment also doesn’t come up.
In addressing the matter, the tribunal determined that the purpose of adding the “presumption” through section 12B was to guarantee that the only person who receives the refund is the one who ultimately pays the tax out of pocket; if not, the money must be placed in the Consumer Welfare Fund. The appellant in the contested case claims that even though the tax was unlawful, it has finally been collected from him and that, as the ultimate consumer, he is now responsible for paying it. Therefore, there is no unjust enrichment and he is qualified for the return.
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