CESTAT, AHMEDABAD BENCH
Commissioner of Service Tax
Sun-N-Step Club Ltd.
ORDER NO. A/1303/WZB/AHD OF 2012
APPEAL NO. ST/615 OF 2010
AUGUST 24, 2012
M.V. Ravindran, Judicial Member – This appeal is filed by the Revenue against Order-in-Original No. STC/13/COMMR/AHD/2010, dt. 31.08.2010, passed by the Commissioner as a revisionary authority under section 84 of Finance Act, 1994.
2. Heard both sides and perused the records.
3. The issue, in brief, is regarding sanctioning of refund to the appellant on the Service Tax paid by him on the entry fee charged to non-members into the club.
4. The respondent herein has filed the refund claim for the amount paid by him mistakenly on the amount collected from non-members. The adjudicating authority, on an refund claim filed by the appellant, issued a Show-Cause Notice for rejection of the claim, on adjudication and dropped the proceedings initiated by Show Cause Notice and allowed the refund. Ld. Commissioner, as a revisionary authority under section 84 of Finance Act, 1994 reviewed the said order of the adjudicating authority and issued another Show-Cause Notice to the appellant, indicating him about the revision of such an order. The respondent replied to the Show-Cause Notice and appeared before the revisionary authority and contested the issue. The revisionary authority came to the conclusion that the respondent is eligible for refund claim of Service Tax paid by him under the mistaken identity of the law. Revenue is aggrieved by such an order.
5. Revenue’s grounds of appeal in this case are limited only to the two points which are reproduced herein below:-
“The assessee service provider has submitted the details of card-room income from club members and non-members under their letter dt. 24.12.2007. The details submitted by the service provider indicate that the charges collected by them from members and non-members are inclusive of Service Tax. To illustrate, the gross income from the card room in the month of April 2006 is Rs. 1,25,078/-. The service provider has shown the break-up of the said gross income as Rs. 1,12,770/- Net Income + Rs. 12,308/- Service Tax. Thus, the gross amount collected from the clients is inclusive of Service Tax and it is clear that the Service Tax has been collected from the client.
The adjudicating authority has also observed that the service provider has paid the Service Tax out of gross amount collected from the clients. This clearly indicates that the gross amount collected from the clients was inclusive of Service Tax. Thus, the doctrine of unjust enrichment in terms of the provisions of section 12B of Central Excise Act, 1944 as made applicable to Service Tax vide section 83 of Finance Act, 1994, would be applicable to the facts of the present case.
Section 73A(2) of Finance Act, 1994 reads as:
“Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government.”
In the instant case, the gross charges collected from the clients is inclusive of Service Tax which implies that certain portion of the gross amount is collected as representing Service Tax. Thus, such amount so collected as representing Service Tax was required to be deposited to the credit of Central Government which was rightly done so by the service provider. Subsequently, the question of refund of such amount does not arise inasmuch as it would tantamount to unjust enrichment.”
6. Ld. D.R. would emphasize upon the fact that there is an unjust enrichment in this case as the respondent has worked back the Service Tax liability and deposited the same, which would indicate that the respondent has collected the amount from the non-members also.
7. Ld. Counsel appearing for the respondent would submit that the adjudicating authority, in his Order-in-Original, has specifically recorded the finding “copy of the invoice reflects that there is no Service charge and consequently receipt of non-membership income is without Service Tax.” It is his submission that against such a categorical factual finding recorded by the adjudicating authority, there is no contrary evidence produced by the Department. It is also his submission that in an identical set of facts in respect of another assessee, the Division Bench of the Tribunal in the case of CST v. V.S. Infrastructure Ltd. 2012 [Final Order No. ST/281/2011, dated 7-7-2011], had held that the question of unjust enrichment does not arise. As regards invocation of section 73A of Finance Act, 1994, it is his submission that the said provision can be invoked only when the amount is charged as Service Tax liability and in this case there is no charge as the amount has been paid by him working back from the amount received from the non-members.
8. After considering the submissions made by both sides and perusal of the records, I find that there is no dispute that the respondent has paid an amount as Service Tax liability on the income received from the non-members, working backwards the Service Tax liability. I find that the adjudicating authority, as correctly pointed out by the ld. Counsel, has recorded a factual finding that the respondent has not charged Service Tax on any of the amount which has been charged by him to the non-members. Both the lower authorities have held that the respondent is not liable to discharge the Service Tax liability on the non-members under the category of Club & Association Services.
9. I find strong force in the contention raised by the ld. Counsel that the respondent’s issue is not hit by unjust enrichment. It is his submission that the Tribunal’s decision in the case of V.S. Infrastructure Ltd. (supra) had held as under:
“The Respondent acted as agent for distribution of Mutual Fund units of various Asset Management Companies. The Asset Management Companies paid them commission for rendering service as their agents. The Ministry of Finance vide Circular No. 66/15/2003-S.T., dated 5-11-2003 issued a clarification that such commission is liable to service tax under heading of Business Auxiliary Service and the Respondent was asked to pay Service Tax. However, the Respondent filed a writ petition before the Delhi High Court challenging the said circular issued by the Ministry of Finance. The Delhi High Court struck down the circular vide orders in W.P.(C) No. 8552/04. Consequently the Respondent filed refund claim for the service tax paid by it. The Deputy Commissioner of Central Excise processing the refund claim was of the view that the Respondent had passed on the Service Tax to the Asset Management Companies and, it had not discharged the burden of proof that it was not getting unjust enrichment through the refund of duties paid and proposed to reject the refund claim of such grounds. After considering the reply of the Respondent, the Deputy Commissioner rejected the refund claim of the Respondent on the ground that it had passed on the incidence to the Asset Management Companies. Aggrieved by the order, the Respondent filed an Appeal with the Commissioner (Appeals). They produced copies of letters issued by the following Asset Management Companies :-
(i) M/s. Templeton Asset Management (India) Pvt. Ltd.
(ii) M/s. Prudential ICICI Asset Management Company Ltd.
(iii) M/s. J.M. Capital Management Limited.
(iv) M/s. Deutsce Asset Management.
(v) M/s. Kotak Mahindra Asset Management Company Ltd.
2. The above Companies certified that the amounts of commission paid to the Respondent was inclusive of all statutory levies and they were under no obligation to pay Service Tax over and above the amount paid as commission. It is the argument of the Respondent that it had borne the incidence from the total amount paid by Asset Management companies and, therefore, there was no question of passing on the incidence of Service Tax. The Commissioner (Appeals) agreed with the contention of the Respondent and ordered refund of the amount claimed by the Respondent. Aggrieved by the order of the Commissioner (Appeals), Revenue has filed this Appeal. The main argument on behalf of the department is that since the letters from the Asset Management Companies indicate that the amount paid by them was inclusive of all taxes and levies including Service Tax, it has to be understood that the incidence of Service Tax has been passed on to the Asset Management Companies and refunding such tax paid could result in unjust enrichment to the Respondent.
3. The Id. Advocate on behalf of the Respondent submits that similar issue was considered by the Tribunal in the case of Panihati Rubber Ltd. v. CCE 2001 (127) ELT 742 (Tri. – Cal.). This was a case where the assessee was to supply material to the Indian railways. The contract was for supply of the items at a particular rate inclusive of all duties. The question whether Central Excise duties were leviable was under dispute. Pending decision in the dispute, the assessee cleared the goods showing excise duty as applicable. Finally, it was decided that the excise duty was not payable. Then the assessee applied for refund and the issue of unjust enrichment was to be decided. The Tribunal decided that in that case there was no unjust enrichment because the total price was fixed and the assessee had to pay disputed excise duty from the total consideration offered to them by the buyer. The Revenue challenged this decision before the High Court of Calcutta and the Hon’ble High Court affirmed the decision of the Tribunal [2004 (172) ELT 310 (Cal.)]. Revenue took the matter to the Supreme Court and the Supreme Court in CCE v. Panihati Rubber Ltd. 2006 (202) ELT 41 (SC) affirmed the decision of the Tribunal and the High Court in the matter.
4. We have considered these decisions and other decisions like that in Subah Engineers (P.) Ltd. v. CCE 2005 (183) ELT 362. It is very clear that this matter is no longer res integra and the Respondent is eligible for the refund claim and, therefore, we order that the refund amount should be paid to the Respondent forthwith. The Appeal filed by the department is rejected.”
10. It can be seen from the above reproduced judgment that the question of unjust enrichment in this case may not arise as facts are similar and this case is squarely covered by the ratio, in favour of the assessee. As regards the provisions of Section 73A of Finance Act, 1994, I find that when there is no invoice raised or issued for collection of an amount as Service Tax, the question of depositing the same with the Government does not arise.
11. In sum, due to foregoing reasons and in the facts and circumstances of this case, I find no merit in the appeal filed by the Revenue. The appeal is rejected.