Amount paid subsequent to Adjudication Order cannot be hit by Doctrine of Unjust Enrichment

Raasi Refractories Ltd. (the Appellant) provided Management services to its customer M/s Visakhapatnam Steel Plant (client) during the period 2003-04 to 2005-06. The Adjudicating Authority confirmed demand of Service tax under the taxable category of ‘Business Auxiliary Service’. The adjudged dues were paid by the Appellant on January 28, 2009.

However, being aggrieved by the Order of the Adjudicating Authority, the Appellant filed an appeal before the Commissioner (Appeals) contending that the activities undertaken at client’s premises were not falling under the purview of ‘Business Auxiliary Service’. The Commissioner (Appeals) set aside the Order of the Adjudication Authority. The said Order of the Commissioner (Appeals) was accepted by the Committee of Commissioners on June 19, 2009, and accordingly, no appeal was preferred by the Revenue.

Pursuant to the Order of the Commissioner (Appeals), the Appellant filed refund claim of the amount so deposited, which was adjudicated by the Deputy Commissioner by sanctioning the refund amount and adjusting the same against the tax arrears dues from the Appellant to the Government exchequer.

Subsequently, in exercise of the powers conferred under Section 84 of the Finance Act, 1994 (the Finance Act), the Commissioner of Central Excise and Service tax sought to revise the Order passed by the Deputy Commissioner on the ground that while sanctioning refund claim, the said Original Authority did not examine the unjust enrichment aspect.

Accordingly, Show Cause Notice was issued and adjudicated by the Commissioner denying refund to the Appellant. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Bangalore.

The Hon’ble CESTAT, Bangalore relying on the case of Gujarat State Fertilizers & Chemicals Ltd. Vs. Commissioner of Central Excise, Vadodara [2006 (205) ELT 458 (Tri.-Mumbai)], held that the amount paid subsequent to the Order of the Adjudication Authority cannot be hit by the doctrine of unjust enrichment, and as such, the Appellant is eligible for refund of the amount.

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