Order Date – 20 December 2022

Facts –

• The appellants, M/s.Sodecia India Ltd. are engaged in manufacture of MV parts and tools, implements of base metal and have also obtained service tax registration for discharging service tax as provider of services.
• The appellant filed two refund claims for an amount of Rs.12,39,386/- and Rs.9,67,149/- for refund of service tax discharged by them on works contract services provided to them by M/s.SRC Projects Pvt. Ltd. and M/s.UR Ground Engineering Pvt. Ltd.
• The appellant contended that they misunderstood the invoice details given by the service providers and discharged service tax liability on the balance 60% of the total amount charged for the services.
• They later came to know that they need not pay 60% of the total consideration and that as the works of construction were in the nature of original works, the service provider has to pay only 40% of the entire consideration.
• After audit they are coming to know that they are not liable to pay any amount of service tax on the construction services provided to them, they filed refund claims on 07.04.2015 for refund of the service tax paid by them under mistake. After due process of law, the original authority rejected the refund claim for an amount of Rs.12,39,386/- on the ground of limitation and unjust enrichment. 

Issues –

• Whether the appellant is entitled to claim the refund.

Order –

• The Tribunal noted that there is an observation by the original authority in both the orders that tax has been paid by mistake. In the case of works contracts which is in the nature of original works, the service provider has to pay only on 40% of the total amount charged for the works contract.
• The original authority vide OIO dt. 30.09.2015 has held that limitation will not apply as the tax has been paid by mistake. The second ground of rejection of refund is that the amount paid is hit by the doctrine of unjust enrichment.
• The argument of the Ld. Counsel for the appellant is that when tax is paid under reverse charge mechanism there is no occasion for passing on the incidence of tax to the customer.
• Section 11B of Central Excise Act, 1944 deals with claim for refund of duty and interest, if any, paid on such duty. Section 83 of the Finance Act, 1994 makes certain provisions of Central Excise Act, 1944 applicable to service tax also.
• The appellant has succeeded in establishing that the amount is not hit by the doctrine of unjust enrichment. 
• The appellant is eligible for refund.