Refund of service tax on foreman commission upheld where levy had not arisen and unjust enrichment was not proved.

Service tax paid on foreman commission for periods before 1 April 2015 was held refundable because the levy had not yet arisen for that period, so the refund claim could not be rejected on the basis that service tax was already payable. The bar of unjust enrichment also did not apply, as the assessee produced a Chartered Accountant certificate and supporting accounts showing that the tax was not collected from customers and the incidence remained with the assessee. The order rejecting refund was set aside and consequential relief followed.

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Issues: (i) whether service tax paid on foreman commission for the period prior to 31 March 2015 was refundable, and (ii) whether the refund claim was barred on the ground that the incidence of tax had been passed on to customers.

Issue (i): whether service tax paid on foreman commission for the period prior to 31 March 2015 was refundable

Analysis: The levy of service tax on foreman commission was introduced only with effect from 01 April 2015. For the periods in question, the liability had not arisen, and the claim for refund could not be rejected on the footing that the levy was already in force.

Conclusion: The refund claim for the pre-01 April 2015 period was maintainable.

Issue (ii): whether the refund claim was barred on the ground that the incidence of tax had been passed on to customers

Analysis: The assessee produced a Chartered Accountant certificate and supporting accounts to show that the service tax was not collected from customers and that the incidence was borne by the assessee. The rejection of that evidence was found to be legal basis, and the material on record was treated as sufficient to establish that the tax burden had not been passed on.

Conclusion: The bar of unjust enrichment was not attracted and the refund could not be denied on that ground.

Final Conclusion: The order rejecting refund was set aside and the appeal was allowed with consequential relief.

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