2025 (5) TMI 1130 - AT - Service Tax

Eligibility for exemption under Sr. No. 21(d) of Notification No. 25/2012-ST dated 26th June 2012 as amended - transportation of specified goods by road/GTA services - failure to produce the documents for the verification of principle of the fact whether they are covered by unjust enrichment. Eligibility for exemption under Sr. No. 21(d) of Notification No. 25/2012-ST dated 26th June 2012 as amended - transportation of specified goods by road/GTA services - HELD THAT - In the impugned order dated 17th August 2016 the Commissioner has clearly held that all edible items stated in Show Cause Notice that qualified for food stuff and transported by appellant are entitled for exemption under Sr. no. 21 of the Notification no. 25/2012 dated 20th June 2012 as amended for period covered under show cause notice. No appeal has been filed by the department against the above mentioned findings. Therefore it has become final. It is pertinent to mention here that the finding of the Commissioner that exemption under Sr. No. 21 (d) of Notification No. 25/2012-ST dated 26th June 2012 as amended must be interpreted in such a way so as to hold that edible items stated in the show cause notice qualified for foodstuff which were transported by appellant during the period covered under the show cause notice and they are entitled for exemption under Sr. No. 21 of the Notification No. 25/2012 dated 28th June 2012 as amended. The finding of the learned Commissioner in this regard is liable to be upheld. Failure to produce the documents for the verification of principle of the fact whether they are covered by unjust enrichment - HELD THAT - It was the duty of the appellant to have filed supporting documents in favour of his application for refund. The excuse given by the appellant does not appear to be convincing that the record is bulky because as per Section 11B (1) refund application made to Assistant Commissioner shall be accompanied by such documentary or other evidence as the applicant may furnish to establish that the amount of duty has been paid. However the argument of the appellant is that they had produced the sample copies of invoice / bilties to substantiate their claim and in addition thereto the appellant had requested the adjudicating authority to direct any concerned officer to inspect the said documents because the record with regard to the whole year would be bulky. However the authorities below have not considered the sample copies of invoices / bilties placed by the appellant on record. This argument is devoid of any force and cannot be accepted. It appears proper to remand the matter back to the Adjudicating Authority to consider the matter afresh after taking into consideration the so called sample copies of invoices / bilties submitted by the appellant to substantiate their claim. The appellant is directed to submit all the original documents or other evidence in support of the refund application irrespective of the fact that the record would be bulky or there may be very huge number of invoices. As this appeal is very old pertaining to year 2017 the Adjudicating Authority shall complete the exercise preferably within 3 months. Conclusion - The appeal is allowed by remanding the matter to the Adjudicating Authority with directions to reconsider the refund claim on the basis of original documents including sample invoices and bilties and to complete the exercise preferably within three months. Appeal allowed by way of remand.

The core legal questions considered in this appeal are:

1. Whether the appellant is eligible for exemption under Sr. No. 21(d) of Notification No. 25/2012-ST dated 26th June, 2012, as amended, for the transportation of specified goods by road/GTA services during the period April 2014 to March 2015.

2. Whether the non-submission of original documents, including ST-3 returns and original invoices/bills, and failure to rebut the doctrine of unjust enrichment are sufficient grounds to reject the refund claim under Section 11B of the Central Excise Tariff Act, 1985.

3. Whether the appellant, having paid service tax on services on which exemption was available, is entitled to claim refund, considering the principle that taxes paid without authority of law are recoverable.

Issue 1: Eligibility for Exemption under Notification No. 25/2012-ST

Legal Framework and Precedents: The relevant exemption is governed by Sr. No. 21(d) of Notification No. 25/2012-ST dated 26th June, 2012, as amended by Notification No. 03/2013-ST dated 1st April, 2013. The exemption applies to Goods Transport Agency (GTA) services relating to transportation of specified goods, particularly edible items classified as foodstuffs.

Court's Interpretation and Reasoning: The Commissioner (Appeals) found that all edible items transported by the appellant qualified as foodstuff and were thus eligible for exemption under the said notification for the relevant period. This finding was not challenged by the department, thereby becoming final. The Tribunal upheld this interpretation, emphasizing that the exemption must be construed to cover edible items stated in the show cause notice and transported by the appellant.

Key Evidence and Findings: The appellant transported edible goods described in the show cause notice, which matched the description of goods eligible for exemption. The department contended that finished products with preservatives did not qualify, but this was not upheld by the Tribunal.

Application of Law to Facts: The Tribunal applied the exemption notification to the facts, holding that the appellant's transported goods fell within the scope of the exemption.

Treatment of Competing Arguments: The department argued that the goods were not natural and thus ineligible; however, the Tribunal gave precedence to the Commissioner (Appeals) finding and the unchallenged status of that finding.

Conclusion: The appellant is eligible for exemption under Sr. No. 21(d) of Notification No. 25/2012-ST for the transportation of edible goods during the relevant period.

Issue 2: Non-submission of Documents and Doctrine of Unjust Enrichment

Legal Framework and Precedents: Section 11B(1) of the Central Excise Tariff Act, 1985 mandates that refund applications must be accompanied by documentary or other evidence establishing that the duty was paid. Refunds under Section 11B(2) are discretionary and subject to the satisfaction of the sanctioning authority. The doctrine of unjust enrichment prohibits refund where the claimant has passed on the incidence of tax to another party.

Court's Interpretation and Reasoning: The Commissioner (Appeals) and the Adjudicating Authority rejected the refund claim primarily due to the appellant's failure to submit original invoices, ST-3 returns, and other relevant documents. The appellant's argument that bulky records justified non-submission was rejected as not legally tenable. The Tribunal agreed that the appellant was duty-bound to furnish adequate documentary evidence to enable verification of the payment of duty and to rule out unjust enrichment.

Key Evidence and Findings: The appellant submitted sample copies of invoices and requested inspection of original documents due to their voluminous nature. However, these samples were not considered by the authorities below. The appellant failed to produce original invoices or ST-3 returns as required. The department highlighted the absence of original documents and the lack of evidence rebutting unjust enrichment.

Application of Law to Facts: The Tribunal found that while the appellant's claim to exemption was valid, the procedural requirement to submit supporting documents was not fulfilled. The appellant's failure to provide complete documentation prevented the authorities from verifying the claim and the absence of unjust enrichment.

Treatment of Competing Arguments: The appellant contended that sample documents and an offer to allow inspection should suffice, but the Tribunal held that this was insufficient under the statutory framework. The department's insistence on original documents and compliance with procedural requirements was upheld.

Conclusion: The appellant's failure to submit requisite documents justified the rejection of the refund claim. However, the Tribunal directed a remand for fresh consideration upon submission of original documents.

Issue 3: Entitlement to Refund of Wrongly Paid Service Tax

Legal Framework and Precedents: It is a settled legal principle that the State cannot retain taxes collected without lawful authority. Refunds are permissible where tax was paid on services exempted by law. The Tribunal relied on precedents where refund claims were allowed on the ground that the appellant paid tax on exempted services under reverse charge and did not pass on the incidence to customers.

Court's Interpretation and Reasoning: The appellant argued that since the service tax was not payable on exempted GTA services, the amount paid was recoverable. The Tribunal recognized that where the appellant pays tax under reverse charge and does not pass the incidence to others, refund claims are maintainable and not barred by unjust enrichment.

Key Evidence and Findings: The appellant paid service tax on GTA services under reverse charge, and there was no evidence that the tax incidence was passed to customers. The Tribunal cited relevant precedents supporting refund in such circumstances.

Application of Law to Facts: The Tribunal applied the principle that taxes paid without authority of law must be refunded and that reverse charge payments not passed on to others do not constitute unjust enrichment.

Treatment of Competing Arguments: The department did not dispute the legal position but focused on procedural lapses. The Tribunal balanced the substantive right to refund with procedural compliance.

Conclusion: The appellant is entitled to refund of service tax paid on exempted GTA services, subject to verification and documentary proof.

Significant Holdings:

"All edible items stated in the show cause notice that qualified for food stuff and transported by appellant are entitled for exemption under Sr. No. 21 of the Notification No. 25/2012 dated 28th June, 2012 as amended for period covered under show cause notice."

"Section 11B(1) states that refund application made to Assistant Commissioner shall be accompanied by such documentary or other evidence as the applicant may furnish to establish that the amount of duty has been paid. Application made without supporting documents deserves to be rejected."

"The appellant failed to produce any rule, circular or statutory provision to show that in case of bulky documents, exemption from submission to revenue or facility for verification at appellant's premises is given."

"The appellant being eligible for exemption from payment of service tax and was not required to pay the service tax but the same was paid by the appellant, therefore, the amount paid by the appellant was not payable in the eyes of law."

"Since the entire amount was paid as reverse charge, the incidence had not been passed on to anybody, but self and therefore the entire amount is not covered under unjust enrichment."

"The matter is remanded back to the Adjudicating Authority to consider the matter afresh after taking into consideration the so called sample copies of invoices / bilties submitted by the appellant to substantiate their claim."

"The appellant shall make available such original documentary or other evidence in support of his refund application on which he relies upon to establish whether the amount of duty has been paid and for verification of the fact whether it is covered by the principle of unjust enrichment."

The Tribunal ultimately allowed the appeal by remanding the matter to the Adjudicating Authority with directions to reconsider the refund claim on the basis of original documents, including sample invoices and bilties, and to complete the exercise preferably within three months. The findings on eligibility for exemption under the notification were upheld as final, and the appellant was granted an opportunity to substantiate the refund claim with proper documentation to address the issue of unjust enrichment.

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