TMI Blog2019 (3) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... to their customers indirectly, the concept of unjust enrichment applies. In the present case, there is no dispute about the eligibility of the refund or the time limit. The lower authority rejected the refund claim on the ground of unjust enrichment which is, prima-facie, not in accordance with the law. If he had found that unjust enrichment applies, he should have sanctioned the refund and credited the same to the Consumer Welfare Fund. The first appellate authority, on the other hand, considered all the facts and came to the conclusion that the refund claim has been accounted for in the books of accounts of the appellant as service tax receivable. The contention of the department is the first appellate authority has wrongly came to this conclusion without himself verifying the books of accounts and merely relying on the Chartered Accountant certificate which is not a conclusive proof. This certificate by Chartered Accountant is comprehensive as to how he has arrived at the conclusion that the amount shown as service tax receivable in the books of accounts of the respondent as receivables included the disputed amount - There is no evidence, whatsoever, presented on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f refund where the inputs or input services are used by the claimant because this burden could have been passed on indirectly to the customers as a part of the cost of production. Aggrieved, the appellant preferred an appeal to the first appellate authority who set aside the order in original and allowed the appeal of the respondent herein with consequential relief. The relevant portions of the order of the first appellate authority are in paras 6 7 as below: 6. The original authority denied the refund of service tax claimed on the ground that the appellants had not produced evidence in accordance with Section 11B read with Section 12 of the Central Excise Act, 1944 to prove that the burden of tax paid had not been passed on by them to any other person. It was noted, in particular, by the original authority that the appellants had not shown the disputed amount of tax as receivable in the books of accounts. The appellants claim is that the amount claimed as refund had been shown in the books of accounts as receivable under the heading current assets. They have also, in these proceedings, submitted a chartered accountant certificate stating that the appellants have show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bad in law. Just because no proof came to be submitted by the appellants, it cannot be said that the burden of duty had been passed on indirectly. Even assuming that they had so passed on the duty, the question to be answered would be to whom did they transfer such burden of duty? In this case, it is clear in terms of the merger order passed by the Hon ble High Court that the transactions w.e.f. 01.04.2015 were intra-party transactions. If they had passed on such burden to a customer or third party, the original authority has not brought on record any evidence to provide such indirect transfer. Such facts are relevant to decide the case and could not have been left to presumptions. The option was with the original authority to further examine and prove his case which he has chosen not to; instead he appears to have hastily concluded with a generalised view that the burden of tax had been transferred by appellants. There is no factual basis for the finding made by the original authority to the effect that the appellant had passed on the burden of duty. As pointed out by appellants, the Hon ble Tribunal has, in the case of Usha International Limited vs. CST, New Delhi (2016(67) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of accounts and has not been added to their profit loss account. (b) The respondent was duty bound to prove through their books of accounts that they had not collected the service tax from their customers which the respondent had failed to do. (c) The Chartered Accountant certificate produced by the respondent is not supported by any work sheet or documents to show how the service tax amount of ₹ 4,08,72,439/- claimed as refund has been shown in their books of accounts. (d) The balance sheet of the respondent during the relevant period shows an amount of ₹ 150.00 crores as statutory receivables but no break up was given. (e) The Hon ble High Court of Gujarat in the case of M/s Kone Elevators India Private Limited and M/s Mafatala Industries Limited {1997(89)E.L.T. 247(S.C)} and M/s Solar Pesticides Pvt.Ltd. [2000(116)E.L.T. 401 (S.C)] and Allied Photographics India Limited [2004(166)E.L.T. 3 (S.C)] categorically held that no refund should be made unless the claimant establishes that he has not passed on burden of duty to others and no exception can be made in this matter. (f) The Ld. First appellate authority has erred in relying solely on the certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimant can still get the refund of the duty/service tax. This issue has been settled by Hon ble Apex Court in the case of Solar Pesticides Pvt.Ltd. (supra) in which it has been categorically held that even if the appellant passes on the incidence of duty/service tax to their customers indirectly, the concept of unjust enrichment applies. In other words, once the refund is claimed, the concept of unjust enrichment must necessarily be examined. The question is how to ascertain whether the incidence of duty/service tax has or has not been passed on to the customers as cost of product/services. The only way this can be done is by examining the books of accounts. If the same has been passed on as the cost of material, the amount will be debited from their cash account and credited to their expenses of materials account in their Profit Loss statement. On the other hand, if the claimant has borne the burden of duty, expecting it to be refunded, he would debit the amount in their cash account and credit it to their receivables account. In other words, they would be accounting for it as the amount which they expect to be refunded from the department and have not added as the cost of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office at 3/11, GIDC, Vapi -396 195 Gujarat for the period April 2015 to June 2016 and based on verification, we certify that the company have shown separately the amount of service tax of ₹ 4,08,72,439/- as service tax receivable in their books of accounts and therefore, not collected the said amount from any party as part of cost of goods sold. We further certify that the company credited the said service tax amount to the Profit Loss account and debited the Service Tax Receivable and has not passed on or collected the said amount of ₹ 4,08,72,439/- from any other party. We further certify that by getting refund of ₹ 4,08,72,439/- of service tax, the company will not benefit by way of unjust enrichment. 9. We find this certificate by Chartered Accountant is comprehensive as to how he has arrived at the conclusion that the amount shown as service tax receivable in the books of accounts of the respondent as receivables included the disputed amount. On the other hand, we do not find any evidence, whatsoever, presented on behalf of the department to show that this certificate is incorrect or doubtful. In this factual matrix, we are satisfied that the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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