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2013 (2) TMI 135 - HC - Service TaxRecovery of the refund - applicant being the transport operator (Service Provider) whereas TISCO, being the person who availed the services of the transport operator - Whether the Tribunal was justified in law holding the refund to be recovered from the applicant and not from TISCO where the applicant was not liable to pay tax and TISCO was liable to pay the tax and paid the tax and that tax has been refunded and paid to the applicant? - Held that - It may be true that assessment can be against an assessee or a person who is liable to furnish the return in accordance with the rules and notice can be issued to that assessee only for charging any tax or for determination of tax or for quantification of tax or for imposition of penalty or interest but in this case, liability is determined and not in question. The amount has been paid to the Revenue and that amount is not refunded because of the setting aside of the order of demand in appeal or otherwise but that amount was refunded which could have been refunded only to that assessee, has been paid to the assessee s agent but by virtue of the judgement of the Supreme Court in Laghu Udyog Bharati & Others 1999 (7) TMI 1 - SUPREME COURT OF INDIA and the effect of the Supreme Court s judgement was nullified by statutory enactment, validity of which has been upheld by the Supreme Court. In that situation, one of the legal proposition applicable is that, one who gets the benefit because of the order of the Court and that order is set aside, he is bound to restore the benefit from whom he got. Therefore, the Tribunal was fully justified in ordering the recovery of the said amount from the person to whom it was paid in view of the judgement of Supreme Court effect of which has been nullified by Finance Act, 2000. The plain and logical consequence of making such law is to restore status quo ante and imposing a duty and obligation on the noticee who got the refund under the overruled judgement to pay back that amount - against the applicant and held that the Tribunal was justified in demanding refund of the amount of the tax paid to the applicant from applicant with the liability of payment of interest @ 24%.
Issues Involved:
1. Whether the Tribunal was justified in confirming the recovery of the refund from the applicant, a transport operator, instead of TISCO, who was liable for the service tax. 2. Applicability of Section 117 of the Finance Act, 2000 to the applicant and liability to pay interest at 24% per annum. 3. Demand of interest from the applicant for the period prior to the setting aside of the refund order by the Commissioner. Detailed Analysis: Issue 1: Recovery of Refund from the Applicant The Tribunal confirmed the recovery of the refund from the applicant, a transport operator, instead of TISCO, who was liable for the service tax. The applicant argued that they were not liable to pay any service tax and that the tax was paid by TISCO, the service availer. The applicant received the refund with TISCO's consent. The validating Act, Finance Act, 2000, nullified the Supreme Court's judgment in Laghu Udyog Bharati & Others, which had quashed the tax liability. The Tribunal was justified in ordering the recovery from the applicant, who received the refund erroneously. Issue 2: Applicability of Section 117 of the Finance Act, 2000 Section 117 of the Finance Act, 2000, imposed a duty to refund any tax refunded due to a court judgment that was later nullified. The applicant argued that they were not liable under the Finance Act, 1997 or 2000. However, the Tribunal held that the applicant, having received the refund, was liable to return it along with interest. The Tribunal's decision was supported by the statutory provision under Section 117, which created a liability independent of the applicant's status as an assessee. Issue 3: Demand of Interest for the Period Prior to Setting Aside the Refund Order The Tribunal held that the liability to pay interest at 24% per annum under Section 117 was clear and statutory. The interest was payable from the date the Finance Act, 2000, received the President's assent. The Tribunal justified the demand for interest from the applicant, who received the refund erroneously. The applicant's argument that the interest could not be demanded for the period prior to the setting aside of the refund order was rejected. Conclusion: The Tribunal's decision to recover the refund from the applicant was justified. The applicant, who received the refund with TISCO's consent, was liable to return it along with interest under Section 117 of the Finance Act, 2000. The demand for interest was statutory and independent of the applicant's status as an assessee. The Tribunal's findings were upheld, and all questions were answered against the applicant.
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