2008 (1) TMI 55 - HC - Service Tax

High Court upholds banking institution's refund claim for excess Service tax, rejects revenue's appeal on unjust enrichment.

The High Court upheld the decision in favor of the banking institution, allowing the refund claim for excess Service tax paid without further verification ... Refund claimed on ground that service tax paid, has not been recovered from its customer – certificate of C.A. certifies the same – Comm(A) & Tribunal justified in allowing refund – claim is not unjust – no contention can be raised for the first time before HC – no question of law arise Issues:1. Whether refund could be granted without verification of documentary evidences including the documents referred to Section 12A of the Central Excise ActRs.2. Whether refund would be admissible without examining the applicability of principles of unjust enrichment as laid down under the provisions of Section 11(B)(2) to Central Excise Act, 1944Rs.Analysis:Issue 1:The respondent, a banking institution, applied for a refund of excess Service tax paid, claiming it was not recovered from customers. The Original Authority rejected the refund application citing insufficient evidence from a compact disc provided by the assessee. The Commissioner of Central Excise (Appeals) found the compact disc admissible, considering the nature of transactions and a certificate from a Chartered Accountant. The Tribunal upheld this decision, emphasizing the admissibility of the compact disc and the satisfaction of the genuineness of the claim. The High Court noted that both authorities found the refund claim valid based on facts, concluding it as a question of fact, not law. Therefore, the first issue was decided against the revenue.Issue 2:The revenue appealed to the Tribunal, challenging the Commissioner of Central Excise's decision on the grounds of unjust enrichment. However, the High Court observed that the revenue did not raise this issue before the Tribunal. The Court held that a new contention cannot be introduced at this stage. Even if considered a pure question of law, the revenue had no merit as the assessee sought a refund for excess service tax not recovered from customers. The Court ruled that if the assessee could not recover the tax, they should not be burdened with paying it, making the refund just and rightfully due. Consequently, the High Court found no legal question arising in this appeal and rejected it.