2015 (8) TMI 1192 - AT - Service Tax

Exported Iron Ore Exempt from Service Tax: Appellant Prevails

Sociedade de Fomento Industrial Pvt. Ltd. Versus Commissioner of CE Customs, Goa

The Tribunal ruled in favor of the appellant, holding that service tax was not payable under the relevant category for exported iron ore and that unjust ... Business Auxiliary Services - Denial of refund claim - Unjust enrichment - Held that:- Iron ore, which was purchased by appellant as a merchant exporter, was exported. If the appellant has exported the consignment, it is a settled law that any tax paid on such exports needs to be refunded. We find that the first appellate authority has arrived at the conclusion of unjust enrichment looking at the accounting treatment given by the person who has paid service tax to the Government i.e. M/s Narvenkar. In our view this proposition is totally incorrect appreciation of the fact as no unjust enrichment arises appellant having paid service tax liability to M/s. Narwenkar as in our view, the accounting treatment given to M/s. Narwenkar may be of no consequence to the appellant for filing refund claim as taxes paid on exported goods. In view of the foregoing, we find that the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. Issues:Refund claim on service tax for exported iron ore, unjust enrichment.Refund Claim on Service Tax for Exported Iron Ore:The appeal before the Tribunal concerned a refund claim filed by the appellant regarding service tax levied on Iron Ore (minerals) exported by them. The appellant argued that no service tax liability arises under the category of Business Auxiliary Services for the exported consignment. The adjudicating authority rejected the refund claim after due process, citing unjust enrichment. The first appellate authority accepted the appellant's contention that service tax was not payable under the category of Business Auxiliary Service for services related to mining pre-01.06.2007 but rejected the refund claim on unjust enrichment grounds.Unjust Enrichment:The appellant's counsel argued that since the iron ore was exported after extraction, unjust enrichment should not apply. They contended that the first appellate authority's findings on unjust enrichment were flawed. The Departmental Representative reiterated the lower authorities' findings. The Tribunal noted that the first appellate authority correctly found that service tax was not payable under the relevant category and also addressed unjust enrichment. However, the Tribunal disagreed with the conclusion on unjust enrichment, stating that if the appellant exported the consignment, any tax paid on exports should be refunded. The Tribunal criticized the reliance on accounting treatment by the entity that paid the service tax, stating it was irrelevant to the appellant's refund claim for taxes paid on exported goods. Consequently, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any.In conclusion, the Tribunal ruled in favor of the appellant, holding that service tax was not payable under the relevant category for exported iron ore and that unjust enrichment did not apply in this case. The decision emphasized that taxes paid on exported goods should be refunded, irrespective of the accounting treatment by the entity that initially paid the service tax.