Chartered Accountant’s Certificate can be used as evidence that the Tax Burden not been passed
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
Brief facts are that the appellants were traders in furniture items and are registered with the department under GTA Services. They were engaged in providing Modular Kitchen in the premises of customers and the department was of the view that such activity would fall under the category of ‘Completition of Finishing Services’. Show-cause notice was issued to the appellant demanding payment of service tax under Completition of Finishing Services, which after adjudication, culminated in confirmation of demand, interest and penalties. The matter reached upto the Tribunal and vide Final Order No.41993/2018, dated 04.07.2018, the Tribunal set aside the demand observing that the said activity does not attract levy of service tax. Meanwhile, after the Order-in-Original was passed, the appellants had deposited the entire amount of service tax along with interest and also the penalties. Consequent to the final order passed by the Tribunal, the appellants filed refund claim for refund of Rs.1,41,636/- being the tax paid along with interest and 25% penalty as confirmed by Order- in-Original. The said refund claim was rejected by the adjudicating authority alleging that the appellant has not produced evidence to show that the tax burden has not been passed on to another. Although, they appealed against this before the Commissioner (Appeals), the order of rejection of refund was sustained by Commissioner (Appeals). Aggrieved, the appellant is now before the Tribunal.
2. The learned counsel Shri B. Jayagopi appeared and argued the matter for the appellants. It is submitted that service tax was not collected from customers. He submitted that the appellants had paid the amount only after the confirmation by the original authority. They had, however, contested the matter before the Tribunal and the demand was set aside allowing the appeal filed by the appellant. He adverted to para 8 of the Order-in-Original and submitted that the appellant is only a trader. They produced a Chartered Accountant’s Certificate showing that they have not passed on the service tax to the customers and have paid it from their pocket. In spite of such certificate, the authorities below have rejected the refund.
3. The learned Authorised Representative Ms. Sridevi T, JC (AR) reiterated the findings made by the Commissioner (Appeals). She relied upon the decision in the case of M/s. Shopper’s Stop Ltd., Vs Commissioner of Customs (Exports), Chennai reported in 2018(8) G.S.T.L. 47 (Mad.,) to argue that Chartered Accountant’s Certificate cannot be the sole evidence to conclude that the incidence of tax has not been passed on to another.
4. Heard both sides.
5. The refund has been rejected on the ground that it is hit by unjust enrichment. It is undisputed fact that the appellants are traders and this being so, it is not possible for them to collect service tax by issue of invoices. Further, the Chartered Accountant’s certified to the effect that they have not passed on the burden of service tax, interest or the penalties to their customers. In the decision of M/s. Shopper’s Stop (supra) relied upon by learned Authorised Representative, the certificate issued by the Chartered Accountant certified that the amount has been shown as Receivables in the balance sheet. The certificate did not state that the burden of tax has not been passed on to customers. For this reason, the Hon’ble High Court had held that such certificate of Chartered Accountant cannot be the sole evidence for concluding that the burden of tax has not been passed on. In the present case, the Chartered Accountant’s Certificate has categorically certified that the burden has not been passed on to another. These documents show that VAT has been collected. There is no collection of service tax. All these facts establish that the burden of tax has not been passed on to another. For these reasons, I am of the view that the conclusion arrived at by the authorities below that the appellant has not passed the test of unjust enrichment cannot sustain. The impugned order is set aside. Appeal is allowed with consequential reliefs, if any.
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