Service tax refund allowed on remand after amalgamation, receivable entries prove tax incidence not passed on

CESTAT Ahmedabad allowed the appeal by remand regarding a service tax refund claim. The appellant company claimed refund following amalgamation with a partnership firm, arguing service was provided to self and tax incidence wasn't passed on. The CA certified the refund amount was shown as receivable and not passed to third parties. However, the appellant couldn't produce books of account during hearing. CESTAT held that showing service tax as receivable constitutes sufficient proof that incidence wasn't passed on, rejecting the Commissioner's contention that tax might have been included in goods cost. The matter was remanded to the Adjudicating Authority for fresh decision after verifying books of account and receivable entries.

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Issues involved:
The judgment addresses the issue of whether the principle of unjust enrichment applies to a refund claim when the service is rendered to self due to amalgamation of companies, and whether the burden of service tax has been passed on to any third party.

Issue 1: Unjust Enrichment in Refund Claim:
The appellant company filed a refund claim post-amalgamation with another company, asserting that services rendered were to self and not taxable. The Assistant Commissioner approved the claim, but the Commissioner set it aside, suspecting that the service tax amount might have been included in the cost of goods. The appellant argued that the service tax burden was not passed on, supported by a chartered accountant certificate. The Tribunal held that the burden of proof lies with the appellant to show the amount as receivable in the books of account for refund approval.

Issue 2: Burden of Service Tax in Amalgamation:
The appellant contended that post-amalgamation, services were rendered to self, and hence, the burden cannot be passed on to any third party. They cited relevant judgments to support their claim. The Tribunal agreed that if the amount is shown as receivable, it indicates the burden was not passed on, rejecting the Commissioner's argument that the tax amount might have influenced the cost of goods. The Tribunal remanded the case for verification of books of accounts before sanctioning the refund.

Separate Judgement:
The Tribunal, comprising HON'BLE MEMBER (JUDICIAL) MR. RAMESH NAIR and HON'BLE MEMBER (TECHNICAL) MR. RAJU, allowed the appeal, setting aside the impugned order. They directed the Adjudicating Authority to verify the books of accounts to establish that the amount was shown as receivable, ensuring the refund approval process. The appellant was granted a fair hearing and opportunity to present their books of account.

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