2022 (3) TMI 106 - AT - Service Tax

Appeal Dismissed: Time Limit Overturned, Unjust Enrichment Upheld

Sham Bhima Chapalkar Versus Commissioner of CGST & CE, Nashik

The tribunal dismissed the appeal challenging the rejection of a refund claim. The rejection based on limitation of time was overturned as the refund ... Refund of service tax paid - unjust enrichment - rejection on the ground of time limitation - Section 11B of Central Excise Act - HELD THAT:- From the grounds as stated it appears that appellant has challenged the order of Commissioner (Appeal) on the ground of limitation. However as per impugned order para 31, after examining the provisions of Section 11B of Central Excise Commissioner (Appeals) has observed that In view of the provision (ec) above, it is clear that the period of one year shall start from the date of the order of the Appellate Tribunal which is 20.08.2015, in this case. The refund has been filed on 28.06.2016, which is within the time period. Therefore, observations of the lower authority are set aside setting aside the rejection on the basis of limitation. Commissioner (Appeals) has upheld the order of original authority rejecting the refund claim on the ground of unjust enrichment stating that it is an admitted position that the refund amount due was not reflected in the books of account of HPCL as claims receivable. This implies that the duty paid was shown as current expenditure and formed part of the Profit and Loss account of the assessee. Thus if the claimant himself has treated the refund amount due as expenditure and not as 'claims receivable', the claimant cannot said to have passed the test of unjust enrichment. Nothing contrary to the findings recorded by the Commissioner (Appeal) has been stated by the appellant in his appeal - appeal dismissed - decided against appellant. Issues Involved:1. Rejection of refund claim due to limitation of time.2. Rejection of refund claim due to unjust enrichment.3. Continuous non-appearance of the appellant.Issue-wise Detailed Analysis:1. Rejection of Refund Claim Due to Limitation of Time:The Deputy Commissioner rejected the refund claim of Rs. 10,68,551 filed by the appellant under Section 11B of the Central Excise Act, 1944, as applicable to service tax matters per Section 83 of the Finance Act, 1994, on the grounds that it was barred by the limitation of time. The Commissioner (Appeals) upheld this rejection, which was challenged by the appellant. The appellant argued that the refund claim should be calculated from the date of the CESTAT order, not from the date of payment. The Commissioner (Appeals) observed that the period of one year should start from the date of the Appellate Tribunal's order, which was 20.08.2015. Since the refund was filed on 28.06.2016, it was within the time period, thus setting aside the lower authority's observations on limitation.2. Rejection of Refund Claim Due to Unjust Enrichment:The Deputy Commissioner also rejected the refund claim on the grounds of unjust enrichment, stating that the appellant had not proven that the incidence of tax had not been passed on to any other person. The Commissioner (Appeals) upheld this rejection, noting the absence of a statutory auditor's certificate and the failure to show the refund amount as 'receivable' in their books of accounts. The Commissioner (Appeals) cited the Supreme Court's observation in Mafatlal Industries Ltd. v. UOI that ordinarily, a manufacturer would pass on the duty rather than not passing it on. Additionally, the tribunal's decision in Hindustan Petroleum Corporation Ltd. Vs. CCE, Mumbai-II was referenced, which held that if the refund amount is treated as expenditure and not as 'claims receivable,' the claimant fails the test of unjust enrichment.3. Continuous Non-Appearance of the Appellant:The appeal was posted for the nineteenth time, but the appellant showed a total lack of interest and did not appear in person or through an authorized representative. The tribunal noted that the application for condonation of delay was adjudged in favor of the appellant in their absence. Rule 20 of CESTAT Procedure Rules, 1982, allows the tribunal to either dismiss the appeal for default or decide it on merits if the appellant does not appear. In this case, the tribunal decided to hear and decide the appeal on merits after hearing the respondent's representative.Conclusion:The tribunal, after considering the impugned order and submissions, found no merit in the appeal. The appellant's grounds for challenging the order of the Commissioner (Appeals) on limitation were addressed, but the rejection on the grounds of unjust enrichment was upheld. The appeal was dismissed.Order Pronounced in the Open Court:The appeal is dismissed.