The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the amount of refund when shown as service tax receivable under asset side of trial balance sheet is not hit by unjust enrichment.
The Adjudicating Authority sanctioned the refund claim of service tax of Rs. 49,58,381/- filed by the appellant in terms of exemption Notification No 25/2012- ST dated 20.06.2012 as amended as per the adjudication order. However, the reviewing authority found that the Adjudicating Authority has failed to address the objection raised by the audit.
The counsel who appeared on behalf of the Appellant submitted that the Commissioner ( Appeals ) denied the refund on the ground that as per the contract value of service, it is inclusive of tax and that admittedly the appellant has paid the service tax on the gross value of the service. Therefore, merely because the contract says that the value is inclusive of service tax does not prove that the value received by the appellant is inclusive of service tax for the reason that the service tax was paid over and above the gross value of the service.
Even though terms of inclusive of tax in the value is mentioned in the contract but the appellant have paid the Service Tax over and above the bill value, therefore, it cannot be said that the service tax paid by the appellant is included in the gross value of the service which was recovered by the appellant from the service recipient. This is further reinforced from the chartered accountant certificate which certifies that the service tax is nil rated or otherwise, the amount receivable from the service recipient is same.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is also fact on record that as per books of account for the year 2013-2014, the amount of refund shown as service tax receivable under asset side of trial balance sheet, this also proves that the amount of service tax has not been passed on to any other person. Accordingly, we are of the clear view that the amount of refund has not been passed on to any other person. Hence, the same is not hit by unjust enrichment.”
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