The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the order passed by lower authority for rejecting the claim for refund of the Service tax as it attracts principles of unjust enrichment.
The Appellant, M/s. The Madras Club is registered with the Service Tax Department for providing membership of Club or Association Service. The authority issued an Order demanding the sum of Rs. 29,24,687 as the Service Tax on the subscription amount received by the appellant from its members.
However, the demand was set aside by the First Appellate Authority Commissioner (Appeals) which was further upheld by the CESTAT.
Thereafter, the appellant filed its claim for refund of the above tax paid by it and that the claim came to be rejected by the Adjudicating Authority for the reason of unjust enrichment since it was never disputed by the appellant that the amount was collected from its customers and consequently, claim for refund of the same would tantamount to unjust enrichment.
A refund could be granted if the conditions laid down under Section 11B are satisfied and the primary condition is the principle of unjust enrichment.
This test the appellant is unable to clear since the appellant is nowhere disputing the fact that it had passed on the duty element to its customers.
There has also been an admission that as and when the refund is obtained, the duty element collected from its customers would be paid back. By this safe play, the appellant has ensured itself no loss since the same has been recovered and it has come in appeal by taking a chance.
Therefore, Tribunal consisting of a Judicial Member P. Dinesha held that the appellant has passed on the tax element to its service recipient, the refund of which is not made as on date, coupled with the appellant’s claim for refund of “tax” clearly attracts the principles of unjust enrichment and hence cannot be entertained. The lower authority has therefore rightly rejected which action does not call for any interference.Subscribe Taxscan AdFree to view the Judgment