Order Date: 8 September 2022

Facts-

• The Appellant, Tamilnadu Trade Promotion organization, has filed an application for refund of the Service tax paid on the advances received during pre GST regime and it was the case of the appellant that upon introduction of GST they had discharged their entire GST liability including such advances for which even Service tax was remitted under the old regime and hence, refund of Service tax paid under the old regime was claimed.
• A Show Cause Notice dated 20.11.2020 was issued to the appellant proposing to reject the refund claim on the grounds that the appellant had not fulfilled the conditions laid down under Section 11B of the Central Excise Act, 1944 and that the appellant had not furnished any evidence to substantiate that the incidence of duty was not passed on to the recipients of service. 
• The appellant filed a detailed reply to the Show Cause Notice substantiating its claim for refund, but however, vide Order-in-Original, the Adjudicating Authority rejected the claim. Aggrieved by the rejection, the appellant preferred an appeal before the Commissioner of G.S.T. and Central Excise (Appeals-II), Chennai, who vide impugned Order-in-Appeal also having rejected the appeal.
• Being aggrieved the appellant has filed the present appeal before this Tribunal.

Issue-

• Whether the appellant is entitled to refund under Section 11B of the Central Excise Act, 1944 of the amount claimed to have been paid as pre-deposit?

Order-

• The Tribunal observed that Higher courts have held that no tax shall be collected without the authority of law and, as a necessary corollary, the amount collected as tax without the authority of law shall be refunded. The liability to tax is determined after adjudication proceedings and the same is not an empty formality. So also, when a bona fide taxpayer remits tax, it is incumbent upon the Revenue to retain the tax as per law and if such remittance is found to be excessive, then that ‘excess’ being collected without the authority of law, shall have to be refunded.
• Strangely, the Adjudicating Authority having referred to the certificate issued by the Chartered Accountant, has not at all discussed anything about it and has proceeded to hold that the appellant had passed on the duty element to the ultimate service recipients and hence, there was unjust enrichment, which, and  is not in accordance with the requirement of law.
• The fact that the appellant claimed refund itself shows that the remittance which was subsequently claimed as refund was not paid in accordance with law and hence, the same would partake the character of an amount being paid under protest or the same being paid by mistake, which aspect has been considered in the ruling of the Hon’ble jurisdictional High Court Judicature at Madras in the case of M/s. 3E Infotech v. CESTAT, Chennai as reported in 2018 (18) G.S.T.L. 410. 
• The Tribunal held that rejection orders of the lower authorities are not in accordance with law, which cannot therefore be sustained. Hence the Appeal is allowed.