Custom, Excise & Service Tax Tribunal
Jamnagar Electric & Machinery Co vs Rajkot on 16 July, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
AHMEDABAD
REGIONAL BENCH, COURT NO. 2
SERVICE TAX APPEAL NO. 12217 OF 2018
[Arising out of OIA-RAJ-EXCUS-000-APP-052-2018-19 dated 01/05/2018 passed by
Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
AHMEDABAD]
JAMNAGAR ELECTRIC & MACHINERY CO Appellant
Punjab National Bank Street, Ranjeet Road,
Jamnagar, Gujarat
Vs.
COMMISSIONER OF CENTRAL EXCISE AND SERVICE
TAX-RAJKOT Respondent
Central Excise Bhavan, Race Course Ring Road, Income Tax Office, Rajkot, Gujarat-360001 WITH SERVICE TAX APPEAL NO. 10686 OF 2022 [Arising out of OIA-RAJ-EXCUS-000-APP-143-2019 dated 27/08/2019 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT] JAMNAGAR ELECTRIC & MACHINERY CO Appellant Punjab National Bank Street, Ranjeet Road, Jamnagar, Gujarat Vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX-RAJKOT Respondent Central Excise Bhavan, Race Course Ring Road, Income Tax Office, Rajkot, Gujarat-360001 Appearance:
Shri Jigar Shah and Shri Amber Kumrawat for the Appellant Shri H P Shrimali, Superintendent (AR) for the Respondent CORAM:
HON'BLE Dr. AJAYA KRISHNA VISHVESHA, MEMBER ( JUDICIAL ) FINAL ORDER NO._10574-10575/2025 Date of Hearing : 17.03.2025 Date of Decision : 16.07.2025 Page |2 ST/12217/2018 & ST/10686/2022-SM Dr. AJAYA KRISHNA VISHVESHA These appeals are directed against the impugned orders-in-appeal dated 26.04.2018 and 27.08.2019 passed by the Commissioner (Appeals) through which he upheld the Order-in-Original dated 10.02.2017 passed by Assistant Commissioner Central GST division Jamnagar but remanded back the case to the Adjudicating Authority with certain direction. By the second order dated 27.08.2019 the learned Commissioner upheld the order of the Adjudicating Authority dated 22.10.2018 but partly allowed the appeal holding that the appellant is also eligible for refund of the interest of Rs. 24,852/-. 1.1 The facts of the case in brief are that the appellant is registered as service provider. Vide Mega exemption Notification No. 25/2012 dated 28 th June, 2012 various services regarding construction work and contract when provided to the government, a local authority or to government authorities were exempted from service tax. Vide notification no. 6/2015-ST dated 1st March, 2015 the said exemption was withdrawn. Thereafter, vide retrospective exemption, these services were again exempted vide Section 102 of Finance Act, 2016 covering the period from 1st April, 2015 to 29th February, 2016. Further, as per the Notification No. 9/2016-ST dated 29th February, 2016, entry no 12A was inserted w.e.f. 1st March, 2016 wherein exemption is granted to the services provided to the government, a local authority or to a governmental authority by way of construction, erection, commissioning, installation, completion etc. in respect of contract which had been entered into prior to 1st March, 2015 on which appropriate stamp duty, wherever applicable, had been paid prior to such a date. The appellant during the said period provided services to AFS Jamnagar and INS Valsura in respect of which he paid the Service Tax amount along with interest vide three challans dated 2nd February, 2016. The total amount of Service Tax paid is Rs.
3,36,664/- and interest of Rs. 29,545/-. Total Rs. 3,66,209/-. 1.2 On 10th November, 2016 the appellant filed a refund claim in terms of Section 102 of Finance Act, 1994. The refund sanction authority issued a show Page |3 ST/12217/2018 & ST/10686/2022-SM cause notice dated 22nd December, 2016 listing 10 deficiencies in para 10 of the notice.
1.3 The show cause notice was adjudicated vide Order-in-Original dated 10th February, 2017 by the first Adjudicating Authority who concluded that MES contract provided for recovery of new levies. The amount of refund is not shown as ST receivable in balance sheet which clearly shows that the amount was recovered from MES. Even if refund is found admissible on merits, it is hit by the bar of 'unjust enrichment.'
2. Being aggrieved with the said Order-in-Original dated 10th February, 2017, the appellant preferred appeal before the Commissioner (Appeals) Rajkot, who vide Order-in-Appeal dated 26th April, 2018 upheld the Order-in- Original dated 10th February, 2017 for refund of Rs. 47,953/- including Service Tax and interest upon it and for remaining refund of Rs. 3,18,256/-, he remanded back the case to the adjudicating authority to ascertain the facts that the service tax refund claim for the period from April, 2015 to September, 2015 is co-related with the details in ST-3 returns and the challans produced by the appellant claiming the payment of Service Tax thereon. 2.1 During the de novo proceedings the Adjudicating Authority vide order dated 22.10.2018 sanctioned the refund of Rs. 2,93,404/- paid towards Service Tax and rejected refund of Rs.24,852/- paid towards interest on the late payment of service tax under Section 102 of Finance Act, 1994 read with Section 11B of the Central Excise Act, 1944 and transferred the sanctioned amount of Rs. 2,93,404/- to the Consumer Welfare Fund under Section 12C of Central Excise Act, 1944.
2.2 Aggrieved by the above mentioned order the appellant preferred appeal before the Commissioner on the ground that the Commissioner (Appeals) has remanded the matter only for verifying the fact of co-relation of Service Tax refund with the details of ST-3 returns and challans. However, the Adjudicating Authority went beyond the directions of the Commissioner (Appeals) and ordered to grant the refund on the basis of the verification of Page |4 ST/12217/2018 & ST/10686/2022-SM the record on one hand and on the other hand ordered to transfer the sanctioned refund amount to Consumer Welfare Fund on the ground of unjust enrichment, which is out of purview in the remand proceedings. 2.3 The Commissioner held in the impugned Order-in-Appeal that the Adjudicating Authority vide Order-in-Original has correctly held that the appellant is entitled for refund but, it is hit by doctrine of unjust enrichment and hence, the sanctioned refund amount was transferred to the Consumer Welfare Fund in terms of Section 12C of the Central Excise Act, 1944. Therefore, the refund of Rs. 2,93,404/- was correctly sanctioned and correctly transferred to the Consumer Welfare Fund by the Adjudicating Authority. Regarding the rejection of refund of interest of Rs. 24,852/- by the Adjudicating Authority the Commissioner (Appeals) observed that the Adjudicating Authority travelled beyond the scope of the Order-in-Appeal dated 26.04.2018 by not following the directions given by the Commissioner (Appeals). He held that the appellant is eligible for refund of the interest of Rs. 24,852/-. However, he found that the amount of refund of the said interest Rs. 24,852/- is required to be transferred to the Consumer Welfare Fund in terms of Section 12C of the Central Excise Act, 1944, as this refund of interest amount is raised due to the refund of the Service Tax of Rs. 2,93,404/- which has been is already transferred to the Consumer Welfare Fund. It was held that the appellant eligible for refund of interest of Rs. 24,852/- and the Commissioner transferred the said sanctioned refund amount of Rs. 24,852/- to the Consumer Welfare Fund in terms of Section 12C of the Central Excise Act, 1944.
3. Feeling aggrieved from the impugned Order-in-Appeal dated 27th August, 2019. The present appeal has been filed before this Tribunal. In the memorandum of appeal, the appellant has submitted that in first Order-in- Appeal dated 26.04.2018, the learned Commissioner (Appeals) concluded the matter and upheld the grounds of unjust enrichment. However, the Commissioner (Appeals) remanded the matter to the Adjudicating Authority Page |5 ST/12217/2018 & ST/10686/2022-SM for a limited issue to ascertain the facts whether the Service Tax refund claim of Rs. 2,93,404/- is co-related with the details in ST-3 returns and the challans produced by the appellant claiming the payment of Service Tax thereon. After verification of the records and the submission made by the appellant during the remand proceedings, the Adjudicating Authority passed the Order-in- Original dated 22nd October, 2018, wherein the refund of Service Tax claim of Rs. 2,93,404/- has been granted. However, it has been ordered to be transferred to Consumer Welfare Fund on the ground of unjust enrichment, which is beyond the directions of learned Commissioner (Appeals). The Order- in-Original dated 22nd October, 2018 has been upheld by the learned Commissioner (Appeals) in the order dated 27th August, 2019 by observing that when the Commissioner (Appeals) upheld the observation made by the Adjudicating Authority in Order-on-Appeal dated 26.04.2018 on the ground of unjust enrichment then, there is no further scope for fresh argument for unjust enrichment issue or submission of fresh certificate of Chartered Accountant before the Adjudicating Authority during the de novo proceedings. The appellant has submitted that since, the issue of unjust enrichment has already been decided in the first order of the Commissioner (Appeals), which has been challenged by the appellant before the Hon'ble CESTAT, Ahmedabad and which is pending for disposal, then it was not the area for which the adjudicating authority or the learned Commissioner (Appeals) was required to corroborate and decide and to order at the time of remand proceedings. However, the learned Adjudicating Authority as well as the learned Commissioner (Appeals) ignored the fact that appeal has already been filed before CESTAT, Ahmedabad and concluded that the refund amount may be transferred to Consumer Welfare Fund.
3.1 It has also been submitted by the appellant that learned Commissioner (Appeals) has erred in holding that incidence of duty has been passed on to other persons and therefore, the claim is hit by bar of unjust enrichment. The Commissioner (Appeals) has observed that the agreement with MES Page |6 ST/12217/2018 & ST/10686/2022-SM specifically provides for reimbursement of new levies and the amount claimed as refund is not showing as a 'Service Tax Refundable' in the balance sheet and therefore, the Service Tax amount has already been recovered from the customer by way of including the same in the rate quoted. The appellant has submitted that, he has adduced all the relevant documents which makes it clear that the service tax has been paid over and above the amount of the gross bills of service provider. This fact can be verified from the bill vise working submitted along with the copy of bills and the challans of the Service Tax, the payment certificate of the Chartered Accountant showing the details of the Service Tax and its payment made by the appellant through challans. Further, the appellant has also submitted the affidavit, signed by all the partners, stating that the Service Tax paid out of its pocket only and not collected from the service recipient as well as not passed on the same to the other period along with certificates dated 9th January, 2017 received from the Garrison Engineer (AF), Military Engineering Services, Air Force Station, Jamnagar confirming that service tax was not included in contract amount as contract was entered prior to 1st March, 2015 and claim was submitted but not refunded for the services provided.
4. The appellant relied on the ratio of the judgment passed by the Gujarat High Court in case of CCE & ST, Bhavnagar vs. Modest Infrastructure Limited (2012) 37 STT 505 in which it was held that where the assessee a job worker paid Service Tax on job worker charges but later applied for refund as the job work would amount to manufacture and with reference to the above the assessee also produced credit notes, CA certificate and certificate from principal manufacturer, Service Tax burden had not been shifted to the principal manufacturer / consumers and further buyers had not taken credit of said Service Tax, it was held that there was no question for unjust enrichment by assessee and refund was allowable to assessee.
In support of the above submissions the appellant relied upon the following judgments:-
Page |7 ST/12217/2018 & ST/10686/2022-SM
(a) Vyankatesh Real State Developers vs. CCE Nagpur, 2015 (50) GST 761
(b) CCE Surat vs. Binakiya Synthetics Limited, 2013 (294) ELT 156 (CESTAT-Ahmedabad)
(c) CCE Pune vs. Jayshree Suraksha Rakshak Sahkari Sanstha 2007 (9) STR 44 (CESTAT-Mumbai) 4.1 The appellant has also submitted that when the refund application has been filed duly supported by the Chartered Accountant certificate stating that the incidence of tax has not been passed on or collected from anyone, the applicant is entitled to refund. Regarding this submission the appellant relied upon the following decided cases:-
(a) CCE & C (Gunthur) vs. Crane Bital Nut Powder Works (2011) 274 ELT 113 (CESTAT-Banglore)
(b) General Commodities Pvt Ltd vs. CST (2010) 25 STT 92 (CESTAT-
Banglore)
(c) TTK Textiles Limited vs. CCE Madhurai, (2015) 315 ELT 511 (Madras)
(d) Santosh Patil vs. CCE Raygarh, (2013) 415 STT 90 (CESTAT-
Mumbai) 4.2 It has also been submitted by the appellant that the Commissioner has stated in the impugned order that the amount claimed as refund is not showing as service tax outstanding in the balance sheet in this connection. The appellant has submitted, what is required to the seen by the department is whether there is unjust enrichment or not and there is no need to look treatment of this amount in books of account by the appellant. The appellant also submitted that Section 102 of the Finance Act or Section 11B of the Act does not stipulate as to how treatment of the amount in the books of account is to be made. The appellant relied on Gujarat Baron Derivatives P Ltd vs. CCE Ahmedabad (2013) 42 GST. The appellant further submitted that the Page |8 ST/12217/2018 & ST/10686/2022-SM amount of the Service Tax has not been passed on to the other person and has been borne by them only. Therefore, they are eligible for refund of Service Tax amounting to Rs. 3,66,209/- along with interest. It has been prayed that the impugned Order-in-Appeal may be set aside and the refund claim of the appellant may be allowed.
5. The learned Authorised Representative for the department argued that the impugned orders passed by the Commissioner dated 26.04.2018 and 27.08.2019 have been passed in accordance with the relevant provisions of the Finance Act and there is no illegality or irregularity in the impugned orders. Therefore, the impugned orders may be confirmed and the appeals may be rejected.
6. I have heard the learned counsel for the appellants and the Authorised Representative for the department and perused the records.
7. With regard to this Service Tax Appeal No. 12217 of 2018, the appellant has challenged the Order-in-Appeal dated 26th April, 2018 through which the learned Commissioner remanded the matter back to the adjudicating authority with the observations that in respect of work with value of Rs. 5,00,000/-, the appellant have only produced certificate dated 1st May, 2015 without any RA bill. Learned Commissioner also observed that for the period April 2015 to September-2015, payment of Service Tax is not evident from original ST-3 returns and the fact of revising the said ST-3 returns by the appellant was not brought to the knowledge of the Adjudicating Authority. The Commissioner, while remanding the matter, directed the Adjudicating Authority to examine ST-3 returns for the period from April-2015 to September-2015. The Commissioner also observed that from perusal of the balance sheet of the appellant it is not observed that any amount is reflecting as Service Tax refundable / Service Tax receivable and CA certificate has been issued considering the revised ST-3 returns and without taking into accounts the Page |9 ST/12217/2018 & ST/10686/2022-SM balance sheet. Thus doctrine of unjust enrichment is applicable and refund claim is unsustainable.
7.1 The question for consideration before this Tribunal is whether the impugned Orders-in-Appeal dated 22nd April, 2018 and 27th August, 2019 have been passed in accordance with relevant provision of Finance Act and there are required to be upheld or whether the Commissioner committed error in passing the above mentioned impugned orders and whether interference by this Tribunal is necessary in order to modify those orders or set aside those orders.
7.2 The first contention of appellant is that the certificate depicting provision of service of Rs. 5,00,000/- approximately is a procedural lapse and should not be a ground for rejection of refund. It is pertinent to note that the refund was rejected on the grounds that no RA bill was provided by the appellant and only a certificate instead of a RA bill was provided which further stated the value in approximation and secondly there was no reference of the work done to the challan produced depicting payment of Rs. 47,953/-. The learned counsel for appellant has argued that the above work was carried out in April- 2015 under a contract of financial year 2013-14 and being a small work, no separate RA bill was issued in this regard. However, the appellants have been issued a certificate dated 1st May, 2015 by the Garrison Engineer for the amount of work done from 1st April, 2015 to 13th April, 2015 amounting to Rs. 5,00,000/- and the same was submitted at the time of claiming refund of the Service Tax. Further, the appellants have also submitted the working of the Service Tax, copy of the contract / agreement dated 15th January, 2014 for allotting this work and a separate challan of Rs. 40,953/- specifically stating the Service Tax of this bill only. Therefore, these are sufficient evidence to establish the fact that during the period under consideration the appellant has concluded the construction work for the Government under the contract entered into before 1st March, 2015 and paid the Service Tax on the bill amount of Rs. 5,00,000/-. The learned counsel for appellant also submitted P a g e | 10 ST/12217/2018 & ST/10686/2022-SM that there is no material defect regarding rejecting the refund of Rs. 47, 953/- paid on the serviceable amount of Rs. 5,00,000/- and the submission of certificate instead of formal bill is mere procedural fault which should not bar the appellants from claiming the refund.
7.3 I do not agree with the above contention of the appellant. I agree with the learned Authorised Representative for the department that since the appellant was providing a service to Government of India, it is difficult to believe that no RA bill was issued. It is also in contravention to Rule 4A of the Service Tax Rules, 1994 under which, every person providing taxable service is legally obliged to issue an invoice, a bill or as the case may be a challan. Further, the certificate that has been produced by the appellant in lieu of RA bill contains the word 'approximate'. When the appellant is seeking a refund of duty, it is imperative that such documents must be provided which may satisfy the refund sanctioning authority. Therefore, the onus is on the appellant which he failed to fulfil. The copy of challan was also examined and the impugned Order-in-Appeal clearly records that it does not give any reference to the said work done. Nothing has been produced with the appeal papers before the Tribunal to fulfill the onus or to disprove the doubt raised by the first appellant authority. The revenue relied upon Dilipkumar and Company case (2018) (361) ELT 577 (S.C.) wherein Hon'ble Supreme Court has held that exemption notification should be interpreted strictly, the burden of proving their applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
7.4 The second contention of the appellant is that the impugned Order-in- Appeal has upheld the findings of the original authority in so far as the refund is sought in r/o 4/2015 to 9/2015 in the ST-3 return for the said period, no ST was shown to have been paid. The appellant further goes on to state that they had revised the ST-3 returns and had deposited the service tax of Rs. 5,65,267/-. The learned counsel for the appellant submitted that they had P a g e | 11 ST/12217/2018 & ST/10686/2022-SM filed the original ST-3 returns from April-2015 to September-2015 on 24th October, 2015 declaring only transportation service under RCM and paid the Service Tax of Rs. 1738/- with interest of Rs. 58/- aggregating to Rs. 1796/- The Service Tax was paid later, on the declared services by the appellant since such work was exempted till Finance year 2014-15 and the same became a new levy through the Finance Act, 2015 applicable w.e.f. 1st April, 2015. The gross bill amount of the services provided to the Government was of Rs. 74,40,000/- and after deducting the applicable abatement of 60% / 30% on this gross bill amount, the taxable value was of Rs. 42,78,000/- and the Service Tax payable on the same was of Rs. 5,65,267/-. Copy of the revised ST-3 returns, filed by the appellants for the period in dispute has been annexed with the memo of appeal. The learned counsel for the appellant has further argued that appellants filed revised ST-3 returns under Rule 7B of Service Tax Rules, 1994. The appellants also submitted copy of challans of Rs. 5,65,267/- vide letter dated 20th February, 2016. Thus, the appellants made the payment of the Service Tax on the "works contract service" of Rs. 42,78,000/- and there arises no question or not paying the service tax for which refund has been claimed. The fact of declaration of payment of service tax is merely procedural in nature.
7.5 I do not agree with the above mentioned contention of the learned counsel for the appellant. I have gone through the impugned Order-in-Appeal. In para 12, 12.2 and 12.3 of the impugned order, the learned Commissioner after examining this contention of the appellant has held that the revised ST- 3 returns and details of payment of service tax was never provided to the original authority. In para 12.3 of the impugned Order-in-Appeal, it has been mentioned by the learned Commissioner, that in these circumstances, for the sake of re-examination and to ascertain the facts of refund claimed vis-a-vis ST-3 returns, he remanded the matter back to the adjudicating authority. I agree with the learned AR for the department that the appellate authority was left with no option but to adopt this course of action because of the failure on P a g e | 12 ST/12217/2018 & ST/10686/2022-SM the part of the appellant to provide these documents to the first adjudicating authority.
7.6 The third contention of the appellant is that the Commissioner (Appeals) has erred in holding that incidence of duty has been passed on to other persons as required and therefore, the claim is hit by bar of unjust enrichment. The learned counsel for the appellant has submitted that the appellant filed all the relevant documents which made it amply clear that the service tax has been paid over and above the amount of the gross bills of service provided. This fact can be verified from the bill wise working submitted along with the copy of the bills and the challans of the service tax payment, certificate of CA showing the details of the service tax and its payment made by the appellant through challans. Further, the appellants have also submitted the affidavit, signed by all the partners stating that the service tax was paid out of its pocket only and not collected from the service recipient as well as not passed on the same to the other period along with certificates dated 9 th January, 2019 received from the Garrision Engineer, Military Engineering Services, Air Force Station Jamnagar confirming that Service Tax was not included in contract amount, as contract was entered into prior to 1 March 2015 and claim was submitted but not refunded for the services provided.
8. The learned counsel for the appellant has relied upon the ruling of Hon'ble Gujarat High Court in CCE & ST Bhavnagar vs. Modest Infrastructure Limited (2012) 37 STT 505, in which it was held that where assesse, a job worker, paid service tax on job work charges but later applied for refund as the job work would amount to manufacture and with reference to the above, the assessee also produced credit notes, CA certificate and certificate from principal manufacturer that service tax burden had not been shifted to the principal manufacturer / consumers and further buyers had not taken credit of said service tax, it was held that there was no question of unjust enrichment by assessee and refund was allowable to him.
P a g e | 13 ST/12217/2018 & ST/10686/2022-SM 8.1 I do not agree with the above contention of the learned counsel for the appellant. In Mafatlal Industries Limited and others vs. Union of India (1997) 5 SCC 536 Hon'ble Supreme Court has held that:-
'The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.' 8.2 I agree with the learned AR for the department that the appellant has not bothered to answer as to why the said amount was not shown in the balance sheet or books of account as 'Service Tax refundable'. The Commissioner has dealt with this issue in the impugned Order-in-Appeal dated 26th April, 2018 in paras 13 to 13.5. The learned Commissioner has stated in the impugned order that on scrutiny of the Balance Sheet for the F.Y. 2015- 16 no such account head 'Service Tax refundable' is found in the Balance Sheet. Thus, as per balance sheet service tax amount has already been charged to the Customers or expensed out and burden of service tax has been passed on. It has also been mentioned in the impugned order that agreement with MES specifically provides for reimbursement of the new levies and the amount of refund is not lying as "service tax receivable" in the balance sheet.
Therefore, it can be safely concluded that the service tax amount has already been recovered for MES. It has also been mentioned in the impugned order that in the C.A. certificate dated 28th January, 2017, it is not certified that the amount of service tax has not been charged to the customers and has not been expensed out.
P a g e | 14 ST/12217/2018 & ST/10686/2022-SM 8.3 Therefore, I have come to the conclusion that the lower adjudicating authority and the learned Commissioner rightly concluded that the appellant failed to prove that the incidence of duty has not been passed on to any other person as required under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and on the issue of doctrine of unjust enrichment, the refund amount was rightly ordered to be transferred to Consumer Welfare Fund. I am also of the view that in view of the above observations the principles of law laid down in Vyankatesh Real Estate Developers case CCE Surat vs. Binakiya Synthetics Limited and CCE Pune vs. Jayshree Suraksha Rakshak Sahakari Sanstha as cited by the appellant are not of any help to them.
9. I am also of the view that, order passed by the learned Commissioner dated 27th August, 2019 has been rightly passed and no interference is necessary in the impugned Order-in-Appeal. The learned Commissioner has rightly allowed the refund of the service tax of Rs. 2,93,404/- and interest upon it Rs. 24,852/- and rightly ordered it to be transferred to the Consumer Welfare Fund in terms of Section 12C of the Central Excise Act, 1944.
10. Consequently, the appeals of the appellant are liable to be rejected. The appeals are accordingly rejected.
(Order pronounced in the open Court on 16.07.2025) (Dr. AJAYA KRISHNA VISHVESHA) MEMBER ( JUDICIAL ) Dharmi