Service Tax Refund to Assessee would amount to Unjust Enrichment If Burden shifted on Customers: Patna HC [Read Judgment]

Service Tax

The Patna High Court has recently held that if the service tax burden has already been shifted to the customers, the assessee cannot claim a refund of the same since it would amount to unjust enrichment.

The petitioner had filed a refund application. However, the service tax department denied the claim under the provisions of the Finance Act, 1994 on the ground that the burden has been shifted by the petitioner on the customers.

The claim relates to the service tax deposited by petitioner for the period 2007-16 and the reason for such belated raising of grievance is that in view of provisions of Section 104 of ‘the Act’, the services provided or agreed to be provided for a long term lease of 30 years or more was not taxable but the observations of statutory authority in order impugned mentions that the petitioner did not submit documentary evidence to espouse his cause.

Justice Jyothi Saran and Justice Partha Sarthy held that “Be that as it may, the fact remains that the service tax for the period in question was deposited by the petitioner but after realizing it from its customers. This fact is not disputed. It is also not in dispute that no refund application was filed by these customers. In such circumstances noted, we find no infirmity in the opinion recorded by the statutory authority to hold that if the burden of the service tax has been shifted on the customers in view of the legal position settled by the Supreme Court in the case of Mafatlal (supra) the petitioner cannot be a beneficiary thereof as any refund to the petitioner would amount to unjust enrichment.”

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