The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai Bench allowed service tax refund as it was established that the amount was not hit by unjust enrichment.
The appellants, M/s Sodecia India Ltd 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.
The appellant filed two refund claims of service tax discharged by them on works contract services. It is the case of the appellant that they misunderstood the invoice details given by the service providers and discharged service tax liability on the balance 60% of the total amount charged for the services and paid service tax.
Later the appellant came to know that they need not pay 60% of the total consideration and that as the works of construction were in the nature of original works, the service provider has to pay only 40% of the entire consideration. Meanwhile, they had taken credit of the service tax paid by them.
On coming to know that they are not liable to pay any amount of service tax on the construction services provided to them, they filed refund claims on for refund of the service tax paid by them under mistake. After due process of law, the original authority rejected the refund claim on the ground of limitation and unjust enrichment and the Commissioner (Appeals) also upheld the same. Hence the present appeal has been preferred.
The Counsel for the appellant contended that the tax having been paid under mistake, the period of limitation as envisaged in Section 11B of Central Excise Act, 1944 will not apply. The Counsel also submitted that the authorities below have wrongly held that the service provided being in the nature of construction of building, the same goes into the capital assets of the appellant and therefore the incidence of tax has to be construed to be passed on to the customer.
The Tribunal of Sulekha Beevi CS, Judicial Member observed that “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.”
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