Amarnath Sharma Vs Commissioner CGST (Appeals) (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, partly allowed the appeal concerning refund of service tax paid on services rendered to the Military Engineering Services (MES). The appellant had provided services during the period April 2015 to February 2016, which were ultimately exempted through retrospective notifications. There was no dispute between the parties that the appellant was entitled to refund on merits. However, it was also undisputed that the appellant had passed on the burden of service tax to MES.
The refund claim was filed by the appellant along with a No Objection Certificate (NOC) from MES. The Department rejected the claim on the ground that, under Section 11B of the Central Excise Act, 1944 (as applicable to service tax), the refund should be claimed by the person who bore the tax burden, i.e., MES, and not by the appellant. The authorities also held that the NOC had no legal validity. Initially, part of the refund had been sanctioned and paid, but subsequently, the same was rejected and recovery was ordered, which was upheld in appeal.
The Tribunal examined whether unjust enrichment under Section 11B would apply in such cases. It rejected the appellant’s argument that unjust enrichment does not apply where tax was not payable. The Tribunal clarified that Section 11B applies precisely to situations where tax was paid but not payable, and thus unjust enrichment principles remain applicable. Since the burden of tax had been passed on, the appellant was not entitled to receive the refund amount.
