2019 (4) TMI 481 - AT - Service Tax

Appellate Tribunal Rules in Favor of Appellant's Refund Claim for Service Tax

Sunrise Spices Ltd. (2 Appeals) Versus C.C.E. & S.T., Jaipur-I

Sunrise Spices Ltd. (2 Appeals) Versus C.C.E. & S.T., Jaipur-I - TMI Issues:- Appellant filed a refund claim for service tax paid under reverse charge mechanism for transport of agricultural produce, which was rejected.- Appellant challenged the rejection of the refund claim before the Appellate Tribunal CESTAT New Delhi.Analysis:1. Issue of Refund Claim Rejection:- The appellant, a service recipient under reverse charge, filed a refund claim for service tax paid for transport of agricultural produce, which was rejected initially.- The appellant contended that they were not liable to pay tax under reverse charge as the service was exempted under Notification No. 3/2013 dated 01.03.2013.- The Department relied on Section 11B of the Central Excise Act to reject the refund claim as time-barred and questioned the evidence provided by the appellant regarding tax burden consideration.- The Tribunal observed that the appellant was not liable to pay tax under reverse charge for transporting agricultural produce as per the notification, and the tax was paid under a mistake of law.2. Applicability of Section 11B of Central Excise Act:- The Tribunal deliberated on whether Section 11B would be applicable to a refund claim made under a mistake of law.- It was noted that the appellant was not obligated to pay service tax for transporting agricultural produce, and the recovery made by the Department without legal authority should be refunded.- Citing legal precedents, the Tribunal emphasized that when duty is paid under a mistake of law, the taxpayer is entitled to claim a refund.- The Tribunal referred to judgments highlighting that the limitation period under Section 11B does not apply to refund claims for service tax paid under a mistake of law.3. Unjust Enrichment and Refund Claim:- The Tribunal addressed the issue of unjust enrichment raised by the Commissioner (Appeals) in one of the appeals.- It was clarified that as the appellant, as a service recipient, paid duty under reverse charge mechanism, the question of recovering the amount from the service provider does not arise.- Relying on a previous decision, the Tribunal concluded that the refund claim was not subject to unjust enrichment.4. Final Decision:- After considering all arguments and legal provisions, the Tribunal set aside the orders under challenge and allowed the appeals, granting relief to the appellant.- The Tribunal emphasized that the Department cannot retain an amount that was not liable to be recovered, especially when paid under a mistake of law.- The decision highlighted the importance of refunding excess tax collected without legal authority and upheld the appellant's right to claim a refund in such circumstances.