Shri Nutan Shah vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-SUR-EXCUS-001-APP-634/13-14 dated 25.03.2014, Passed by Commissioner (Appeals) Central Excise, & S.T., Surat)

Shri Nutan Shah : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Surat : Respondent (s)

Represented by :

For Appellant (s) : Shri Jigar Shah, Advocate For Respondent (s) : Shri T.K. Sikdar, Authorised Representative

For approval and signature :

Mr. H.K. Thakur, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing / Decision : 22.05.2015

ORDER No. A/10638/2015 Dated 22.05.2015

Per : Mr. H.K. Thakur;

This appeal has been filed by the appellant with respect to OIA No. OIA-SUR-EXCUS-001-APP-634/13-14 dated 25.03.2014 under which the first appellate authority has upheld the OIO dated 10.12.2013 passed by adjudicating authority rejecting refund claim of Rs. 6,27,113/- filed by the appellant on 23.02.2009.

2. Shri Jigar Shah (Advocate) appearing on behalf of the appellant argued that appellant paid service tax on services of renting of immovable property and sale of space for advertisement provided to M/s. Reliance Industries Limited (service recipient). That service tax on the said services was not leviable as service recipient did not pay any service tax to the appellant. That Reliance Industries Limited has given a certificate dated 06.10.2011 that they have not paid any service tax to the appellant and has also not taken any service credit on that amount. That the Chartered Accountants certificate dated 05.3.2014 from M/s. Rases Shah & Co., Chartered Accountants, Surat was also placed before the first appellate authority to establish that service tax paid was not recovered from the service recipient. It was his case that service tax payable though included in the invoices issued to the service recipient but the same was not paid by the service recipient. That their case is identical to the case of CCE, Bhavnagar vs. Modest Infrastructure Limited [2011 (24) STR 369 (Tri. Ahmd.)] passed by the Bench, which was upheld by the Hon'ble Gujarat High Court in the case of CCE & ST vs. Modest Infrastructure Limited [2013 (31) STR 650 (Guj.)]. He made the Bench go through the orders passed by CESTAT Ahmedabad and Hon'ble High Court to drive home the point that even if the service tax is mentioned in the invoices, unjust-enrichment is not applicable if the service tax mentioned in the invoices has not been received from the service recipient.

3. Shri T.K. Sikdar (AR) appearing on behalf of the Revenue argued that once service tax amount has been received from the service recipient then unjust-enrichment is applicable. Learned AR relied upon Para 29 of the Order-in-Original dated 10.12.2013 passed by the adjudicating authority and emphasized that appellant has collected service tax from the service recipient.

4. Heard both sides and perused the case records. Appellant filed a refund claim or Rs. 6,27,113/- on 23.02.2009 for the period October 2007 to March 2008. The said refund claim was rejected by Assistant Commissioner, Service Tax, Surat vide order dated 09.9.2010 under Section 11B and 11D of the Central Excise Act, 1944. It has been recorded by the first appellate authority in Para 5(v) and (vi) of OIA dated 25.3.2014 that appellant produced a certificate dated 06.10.2011 issued by M/s. Reliance Industries Limited certifying that service recipient has neither paid service tax on the payments made to the appellant nor taken credit of service tax paid on the bills raised by the appellant. It is also recorded that appellant has produced Chartered Accountants certificate dated 05.3.2014 certifying that appellant has not received any payment towards service tax from the service recipient. In Para 5(vii), the first appellate only decided the issue, as per Para 22 of the OIO dated 09.9.2010, that appellant has passed on liability of service tax to the service recipient and, therefore, unjust-enrichment will be applicable. In this regard, this Bench in the case of CCE, Bhavnagar vs. Modest Infrastructure Limited (supra), relied upon by the appellant, decided the issue in favour of the assessee as follows:-

2.?As per facts on record the respondent filed the claim of refund of service tax of Rs. 16,63,451/- with the Assistant Commissioner, Service Tax Division, Bhavnagar on the ground that they are job worker and therefore they cannot be held as service provider under business auxiliary services as their activity accounts to manufacture as per Section 2 of Central Excise Act, 1944 and therefore they sought the refund of Rs. 16,63,451/- being wrongly paid by them under business auxiliary services.

3.?The lower authority while deciding the refund claim vide his Order- in-Original No. R/07/2008-2009 dated 3-12-2008 held that they are not covered under the business auxiliary services as their activity amounts to manufacturing and sanctioned the refund and transferred the same to consumer welfare fund on the ground that the respondents have realized the payment of their invoice dated 21-2-2007 under which they have shown service tax of Rs. 16,63,451/-. Since the respondents have realized the same from their principles the duty burden has been passed on and therefore the refund was hit by the bar of unjust enrichment.

4.?Being aggrieved with the said order an appeal was filed before Commissioner (Appeals) on the ground that Assistant Commissioner has failed to appreciate that as per ledger produced they have not received the full amount from the client for the work done; that they have issued credit note for the wrong service tax charged in the bill and thus the issuance of credit has effectively reduced their bill amount from their client; placed reliance on the case laws of Jyoti Ltd. - 2008 (232) E.L.T. 832, Prachar Communication Ltd. - 2006 (2) S.T.R. 492 (Tri. - Mumbai), Kirloskar Ebara Pumps Ltd. - 2007 (5) S.T.R. 280 & M.A. Financial Services - 2006 (2) S.T.R. 350.

5.?The appellate authority considered the various clauses of the contract entered into between the respondent and M/s. Alcock Ashdown (Gujarat) wherein the price was to be inclusive of all taxes, levies, duties etc. He also took note of the fact that the M/s. Alcock Ashdown (Gujarat) have issued credit note for the amount in question wrongly collected vide debit notes and credited the same into the books of account. He also perused the Chartered Accountant certificate and the various documents submitted to show that it was only an entry showing debit and credit and no service tax amount was actually received from their customers. He also took note of the fact that no credit of the service tax in question was filed by M/s. Alcock Ashdown (Gujarat). Accordingly he held that the refund is not hit by bar of unjust enrichment.

6.?The Revenue in their memo of appeal have held that once the assessee had passed on duty burden at the time of clearance of the goods, subsequent issuance of credit notes to the buyers cannot come to their rescue. They have also submitted that the onus to show that the duty in question has not been collected from the customers is upon the assessee.

7.?While there can be no dispute about the above two legal issues, but in the present case we note that the total consideration contracted between the respondent and their buyer was inclusive of all the taxes. As such the excess service tax paid by the respondent was only being shown as separate in the invoice and was not actually collected from their customers. By raising the subsequent credit notes, it is only the entries in the books of accounts which were sought to be rectified. Further the Chartered Accountant certificate and the certificate of the buyer also show that the amount of service tax was not received by the respondent from their customers. As such we find no infirmity in the view adopted by Commissioner (Appeals). Accordingly the appeal filed by the Revenue is rejected.

4.1 The above order passed by CESTAT Ahmedabad was taken to the High Court by the department and Hon'ble Gujarat High Court vide order dated 21.08.2012, reported as CCE & ST vs. Modest Infrastructure Limited [2013 (31) STR 650 (Guj.)], upheld the order passed by CESTAT Ahmedabad by making following observations in Para 11:-

11.?Once the M/s. Alcock Ashdown (Gujarat) themselves issued certificate that the amount of service tax was not received by the respondent from their customers then there was no question of undue enrichment by the respondent. In our opinion the Commissioner (Appeals) as well as the Tribunal were correct in taking the view that the refund was liable to be paid to the present respondents as service tax was not passed on to the buyers/customers and there was no unjust enrichment. Therefore, we do not find any illegality in the impugned orders. We are in agreement with the view taken by the Tribunal and Commissioner (Appeals) that there was no unjust enrichment and the respondent is entitled for refund. Both the questions formulated are concluded by finding of fact and the appeal is liable to be dismissed. Both questions are answered against the Revenue in favour of the assessee on the facts of this case. Accordingly this tax appeal is dismissed.

5. It is observed from the above law laid down by this Bench and the jurisdictional High Court that the facts were identical to the facts of the present case where service tax element was shown in the invoices but the same was not paid by the service recipient. In the present case, Chartered Accountants certificate dated 05.3.2014 certifies that service recipient M/s. Reliance Industries Limited has not paid any service tax to the appellant on account services of lease of vacant land for merchandising of on-fuel products and lease of vacant land for erection and display of hoarding. Service recipient M/s. Reliance Industries Limited vide letter dated 06.10.2011 has also confirmed that they had neither paid tax on these services to the appellant nor taken any credit of the service tax paid by the appellant. Appellant has therefore, discharged its onus that excess service tax paid has not been recovered from the customers. There is no evidence on record produced by the Revenue showing any further verification on the part of the Revenue to the effect that the claim of the appellant of not passing on the service tax is not genuine and that the excess service tax paid is actually paid by the service recipient.

6. In view of the above observations and the law laid down by the Hon'ble Gujarat High Court in the case of CCE & ST vs. Modest Infrastructure Limited (supra), appeal filed by the appellant is allowed with consequential relief, if any.

(Operative part of the order pronounced in the Court)

(H.K. Thakur) Member (Technical) .KL

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