CESTAT dismisses Rs. 1.23 crore refund appeal due to unjust enrichment concerns and insufficient evidence

CESTAT New Delhi dismissed the appeal regarding refund claim of Rs. 1,23,70,024. The appellant failed to prove it would not be unjustly enriched if refund was granted. Despite claiming credit notes were issued to builders, no evidence was provided that the builders had not already collected service tax from flat allottees. The Assistant Commissioner correctly ordered refund to Consumer Welfare Fund due to unjust enrichment concerns. The appellant's failure to substantiate its claim before Commissioner (Appeals) with sufficient evidence resulted in dismissal of the appeal.

---

---

Issues Involved:
1. Whether the appellant is entitled to a refund of Rs. 1,23,70,024/-.
2. Whether the refund should be credited to the Consumer Welfare Fund due to unjust enrichment.

Summary:

1. Entitlement to Refund:
The appellant, engaged in the construction business, was awarded contracts by Unitech and Vatika, who supplied cement and steel free of cost. The appellant raised supplementary invoices and charged service tax as a precaution, which was paid by Unitech and Vatika and deposited with the service tax department. A show cause notice was issued, and the Commissioner of Central Excise confirmed the demand. The Tribunal allowed the appeal and quashed the order, entitling the appellant to a refund subject to verification of unjust enrichment.

2. Credit to Consumer Welfare Fund:
The Assistant Commissioner sanctioned the refund but credited it to the Consumer Welfare Fund, citing unjust enrichment. The Commissioner (Appeals) upheld this decision, stating that the appellant had collected service tax from Unitech and Vatika and there was no evidence that the burden was not passed on to the final consumers. The appellant's issuance of a Credit Note was not sufficient to prove that the burden was not passed on.

3. Verification of Unjust Enrichment:
The Tribunal's order required the appellant to establish that the refund would not result in unjust enrichment. The appellant failed to provide sufficient evidence to substantiate that Unitech and Vatika had not recovered service tax from the allottees of the flats. The Assistant Commissioner and the Commissioner (Appeals) assumed that the builders had recovered service tax from the allottees, leading to unjust enrichment if the refund was granted to the appellant.

4. Reliance on Precedents:
The appellant's reliance on the Supreme Court's decision in Sunrays Engineers Pvt Ltd and the Tribunal's decision in M/s Jalan Con Cast Ltd was not applicable as the appellant did not provide adequate evidence to support their claim.

Conclusion:
The appeal was dismissed, and the order to credit the refund to the Consumer Welfare Fund was upheld due to the appellant's failure to prove that the refund would not result in unjust enrichment.

---