By TIOL News Service

MUMBAI, DEC 09, 2014: THIS case has travelled quite far…right up to the Finance Minister…but Revenue seems to take it farther!

Brace yourself for some lengthy reading…for Revenue has pulled out all the stops - they wouldn't like to be called losers …

Take a look at what the CESTAT had held at the first stop -

2014-TIOL-1794-CESTAT-MUM - Order dated 21.08.2014

ST - As provision of telecommunication service to international roamers would amount to export of service, refund is permissible in law - Revenue appeal dismissed - as huge amounts of refund were kept pending, the Bench directed the Jurisdictional Asst. Commissioner to dispose of the rebate/refund claims within a period of one month from the date of receipt of the order: CESTAT

And this is what the CESTAT held when the rebate/refund claims were not sanctioned as directed by the CESTAT and the assessee filed a Miscellaneous application u/r 41 of the CESTAT (Procedure) Rules, 1982 -

2014-TIOL-2263-CESTAT-MUM - Order dated 30.10.2014

ST - Commissioner is gaining time by citing one reason or the other and not sanctioning the refund - authorities to take expeditious steps to sanction the refund keeping in mind that interest is to be paid from the kitty of the general public - Order marked to Finance Minister for consideration: CESTAT

Call it fighting spirit or obstinacy for the fact is that the Revenue was apparently not perturbed by this order and had filed a Miscellaneous application for Rectification of Mistake in the final order dt. 21.8.2014 2014-TIOL-1794-CESTAT-MUM passed by the Tribunal on the ground mainly that question of unjust enrichment has not been looked into by the Bench and the same needs to be gone into.

And this is what the Bench had held on 17.11.2014 -

ST - Delay in granting refund by Commissioner - Tribunal does not appreciate filing of ROM by Revenue but to meet the ends of justice, application listed for hearing on top of the Board - we direct the concerned Commissioner to file an undertaking before this Tribunal to the effect that in case the Revenue does not succeed in the ROM application, the refund shall be disposed within three working days from the date of disposal of the ROM. Such undertaking should be filed by Thursday on 20.11.2014: CESTAT

We reported this order yesterday as 2014-TIOL-2469-CESTAT-MUM.

This is what happened when the matter was heard on 21.11.2014.

The Bench noted that in pursuance of its order dated 17.11.2014 the Revenue had filed an undertaking dated 20.11.2014 and which stated -

"refund application would be disposed of within three days of receipt of the order dealing with the ROM application, subject to the submission of required documents i.e., FIRCs along with export invoices by the refund claimant".

The Bench observed - This was not what was asked by this Tribunal when the matter was heard on 17/11/2014 and this Tribunal has also not put any condition in this regard. Therefore, the Revenue on its own cannot put any conditions with regard to sanction of the refund claim. While Revenue is at liberty to grant the refund subject to the outcome of any petition, application or appeal, which they may like to file before the competent authorities,Revenue cannot lay down conditions to this Tribunal while placing the undertaking that they would grant refund only subject to some other conditions. Therefore, we have no hesitation in setting aside the conditions stipulated in the above undertaking and we direct that, while Revenue is at liberty to say that the refund would be subject to the outcome of the petition/appeal that they would like to file before the appropriate authority, they cannot refuse to grant refund on the ground that the appellant is required to file certain documents which was not the case when they pleaded the case before this Tribunal.

Thereafter, the Bench took up the application for rectification of mistake.

In the application, it is urged by the Revenue that there is an error apparent on the face of the record as no finding at all has been given regarding the applicability of the principles of unjust enrichment in spite of the fact that the same was one of the main grounds of the appeal and the service tax amount has been collected from the customer.

To this, the Bench pointed to the contents of paragraph 2 of its order 21/08/2014 and observed that it had clearly recorded the contentions urged by the Revenue.

Furthermore, the Bench noted that in their appeal memorandum, the only statement made by the Revenue is - that the Commissioner (A) failed to examine the principle of unjust enrichment, which was required to be examined by him before allowing the appeal filed by the claimant. The Commissioner (A) has ignored the said principle by simply stating that the Revenue had not come up with corroborative evidence or detailed reasoning for not accepting the documentary evidence submitted by the claimant along with the refund claim. Therefore, the Commissioner (A) in his order failed to justify principle of unjust enrichment due to lack of proper reasoning.

The Bench, thereafter, observed -

“5.3 …, the Revenue has not filed any documentary evidence before this Tribunal while passing the impugned order dated 21/08/2014 as to how M/s. Vodafone (India) Ltd. has unduly enriched themselves by filing the refund claim. Therefore, by merely making a statement that unjust enrichment principle has not been examined that by itself would not substantiate the Revenue's claim that there was unjust enrichment in the transaction. Nothing prevented the Revenue by producing relevant documentary evidence which clearly establish unjust enrichment if the refund is sanctioned to the service provider. In the absence of such documentary evidences, this Tribunal cannot be expected to give a finding that unjust enrichment principle is involved in the transaction as that would be a mere presumption without any basis. We further observe that the learned appellate authority while disposing of the refund claims, in para 35 of his order has observed as follows:…”

“35. The Revenue has contended that the certificate issued by the Chartered Accountant affirming that the incidence of service tax had not been passed on to any other person alone cannot be considered as sufficient evidence in view of the decision in the case of CCE, Chennai II vs. Caterpillar India Pvt. Ltd. - 2009 (246) ELT 725 (Tri. Chennai) wherein it has been ruled out that ‘Chartered Accountant's certificate stating that incidence of duty was not passed on to the buyers is not sufficient. The Revenue has also claimed that there should be recorded/documentary evidence (like billing practice) to support such assertion. It may be noted that the Adjudicating Authority has recorded a finding that the burden of service tax on inbound roaming has not been passed on to the International service providers or any other person in the respective bills submitted by the Respondent NO. 2 in the form of CD and the Chartered Accountant's certificate, which is sufficient documentary evidence for deciding the refund claim. The Revenue, though have claimed that this is not sufficient, they have not come up with any corroborative evidence or detailed reasoning for not accepting the documentary evidence submitted by the Respondent No. 2 along with the refund claim. The Hon'ble CESTAT in C.Cus&C.Ex, Guntur vs. Empee Sugar and Chemicals Ltd. in their Final Order No. 2058/2006, dated 15-12-2006 reported in 2007 (7) S.T.R. 622 (Tri. - Bang.) has held that:

‘Unjust enrichment - Education cess - Proof of non-passing of duty to buyer - Chartered Accountant's certificate about same has evidentiary value - It is acceptable as he cannot give incorrect/false certificate since that would have penal consequences - Section 11B of Central Excise Act, 1944.' [para 4]

4. I am of the considered opinion that the Commissioner (A) is justified in arriving at the above conclusion in holding that the Cess has not been passed on to the buyer. The Chartered Accountant cannot give an incorrect or false certificate, as such issuance of certificate will have penal consequences. It has evidential value and it has to be accepted.”

To this observation of the Bench, the Revenue submitted that the observation of the Commissioner (A) relates to only one of refund claims and not in respect of the five refund claims which was the subject matter for consideration in order-in-appeal No. No. 366 to 370 dated 20/09/2013 and, therefore, this observation of the lower appellate authority should be restricted to only one of the refund claims and not to the other four.

The Respondent in the case M/s. Vodafone (India) Ltd. submitted that the principle of unjust enrichment was contested by the Revenue only in respect of one of the refund claims and this point was never raised before the lower appellate authority in respect of the other claims. They submitted copies of the appeals filed before the lower appellate authority in support of this contention.

In the light of the aforesaid submissions by the Revenue and the respondent, the Bench observed -

"6. We have perused the appeals filed by the Revenue in this regard and we find that there is no whisper anywhere of the unjust enrichment being involved, except in one case. Therefore, the lower appellate authority is not required to given any finding on an issue which was not urged before him. Therefore, the ground taken by the Revenue that it had urged this point before the lower appellate authority is not borne out from the records and, therefore, it cannot be said that there is an error apparent on the face of the record committed by this Tribunal. We further observe that while disposing of the appeal filed by the Revenue, we have also observed that the transaction involved is one of export, and therefore, the service provider is rightly entitled for the refund of the service tax paid. The learned counsel for the respondent also submits that even in respect of the export transaction, if tax is recovered from the customers, the same would not disentitle the tax payer from claiming refund as held by the hon'ble Bombay High Court in the case of Uttam Steel Ltd. vs. Union of India 2003 (158) ELT 274. The hon'ble High Court in the said decision while considering the rebate of duty under Rule 12 of the erstwhile Central Excise Rules on export of goods had held as follows:…"

The Bench also noted that the same view was taken in the case of Convergys India Services P. Ltd. - 2011-TIOL-1902-CESTAT-DEL also held the same view; that in the case of Balkrishna Textiles P. Ltd. - 2008-TIOL-2831-CESTAT-AHM (upheld by Gujarat High Court) it is held that principles of unjust enrichment would not apply in respect of exports.

The decision in Rashtriya Chemicals & Fertilizers Ltd. - 2012-TIOL-1737-CESTAT-MUM (affirmed by Bombay High Court) is also adverted to. It is held therein that even if grounds have been taken in appeal memorandum but if the same is neither urged nor argued at the time of hearing there cannot be any mistake which involves rectification.

In fine, it is held that there is no merit in the contention urged in the Rectification of Mistake Application filed by the Revenue and accordingly the same was rejected.

The conclusion -

8. As a consequence, the Revenue would be required to refund the amount paid by the respondent, M/s. Vodafone (India) Ltd. in terms of the undertaking executed by them. The question of submission FIRCs along with export invoices, which has already been filed by the service provider are available in the records of the Revenue and are not required to be submitted once again.  

(See 2014-TIOL-2479-CESTAT-MUM )