Order Date – 30 January 2023

Parties: M/s Chambal Fertilizers and Chemicals Limited Vs The Commissioner, Central Goods and Service Tax,

Facts –

• The Appellant, M/s Chambal Fertilizers and Chemicals Limited, in the year 2006 – 2007 had entered into various agreements with foreign parties for procurement of rights and licenses for use of technical information for manufacturing fertilizers.
• A show cause notice for demand of Service tax was issued to the appellant on 28.07.2008 alleging that the appellant had imported “intellectual property rights” service, which was susceptible to service tax in the hands of the appellant and paid the amount under protest.
• The refund claim filed by the appellant was rejected on the ground that the appellant did not pass the test of unjust enrichment.

Issue –

• Whether unjust enrichment has to be examined while considering a claim for refund of an amount deposited during investigation?

Order – 

• The Tribunal held that any amount deposited during the pendency of adjudication or investigation is in the nature of a deposit and, therefore, cannot be considered to be towards payment of service tax or excise duty. The principles of unjust enrichment, therefore, would not apply if a refund is claimed for refund of this amount.
• The method of accounting followed by an assessee does not impact the admissibility of refund, and cannot be made a basis to hold that the incidence of duty had passed. If the price of goods is fixed by the Government of India, such price cannot be altered by inclusion of any duty. Thus, the issue of unjust enrichment would not be applicable.
• Hence the appellant would be entitled to refund of the amount with interest at the applicable rate. The appeal is allowed.