CESTAT, AHMEDABAD BENCH
Daivesh N. Shah & Co.
Commissioner of Service Tax, Ahmedabad
ORDER NOS. A/241-242/WZB/AHD OF 2012
APPEAL NOS. ST/473-474 OF 2010
JANUARY 17, 2012
1. Even though two orders have been passed rejecting the refund claims filed by the appellants, since the issue involved is same in both the cases and period involved is also same, both the appeals are taken together and a common order is being passed.
2. Appellant had received certain amounts in April 2006 for providing services and since the eligibility or otherwise for the year 2005-06 was in dispute, the appellant felt that it would be appropriate for them to discharge the liability instead of taking risk of payment of interest and penalty etc. subsequently, they made the payment in October 2006. Subsequently, the dispute regarding eligibility for exemption was settled in their favour in the year 2005-06 and therefore they filed refund claim for the amounts paid in 2006-07. The claim has been rejected on the ground that the appellant have not been able to cross the hurdle of unjust-enrichment.
3. The learned Chartered Accountant on behalf of the appellants submitted that appellant is following the cash method of accounting and therefore, as soon as the service tax payment was made it had to be booked in the expenditure account; further income tax law also requires that the expenditure is to be booked in the year in which the payment has been made; the payment was made under protest and when the bills were raised in April 2006, the amount had not been collected ; service tax was paid by them since they had felt that in the event of issue being decided against them, they would be risking the liability to pay interest and penalty and there was no question of collecting from any of their customers; the appellant had produced the Chartered Accountant’s certificate that the amount had not been collected which has not been considered by the lower authorities. The learned DR submits that Chartered Accountant’s certificate is not sufficient to show that there was no unjust-enrichment. It has to be shown by the appellants that in the financial accounts, this amount was shown as recoverable and in the absence of any such showing, the presumption of the law is against the appellant and therefore, the decision taken by the lower authorities has to be upheld.
4. I have considered the submissions made by both the sides. In this case the appellant have tried to ensure that the law is followed and is implemented properly. Therefore, as soon as the dispute arose in 2005-06, they made the payment under protest. Further, I also found from the Chartered Accountant’s certificate that the certificate clearly says that the incidence of the said service tax had not been passed on by them to any other person and it was not recovered from the clients. Further, on a specific query from the Bench, learned Chartered Accountant submitted that the accounts in this case were not audited and therefore, the question of making specific remark in the accounts does not arise. I am inclined to agree with them in view of the fact that in this case the service tax amount was paid subsequently and under protest. Further, the appellant is following cash method of accounting and the Chartered Accountant’s certificate specifically states that incidence has not been passed on. I find that under the facts and circumstances of this case, the appellants have been able to show that there is no unjust-enrichment. Therefore, both the appeals are allowed with consequential relief to the appellants, if any.
5. Both the appeals disposed of in above terms.