ST - Refund - Appellants charging client based upon quantity of concrete pumped through equipment installed by them - as charges are not in nature of rental but with reference to work performed they are to be held as inclusive of ST - unjust enrichment attracted: CESTAT
By TIOL News Service
MUMBAI, MAY 21, 2014: THE appellants have provided Concrete Pumps on rental basis to M/s. Ultratech Cement Ltd. and M/s. Larsen & Toubro Ltd. for pumping operation. The appellants were getting the compensation on the basis of cubic meter of concrete pumped. They had also deployed certain manpower to ensure the proper functioning of the pumps. Pumps were deployed at various sites where the construction activities were going on. Appellants' rates per cubic meter were consolidated and included all taxes, VAT etc. They were also paying service tax on the said activity under Business Support Service [Infrastructural Support Service] from May 2007 to January 2008 and filing the service tax returns. Never was the taxability disputed by the appellant.
In the Union Budget 2008, a new service under the name “supply of tangible goods service” was introduced.
Consequently, the appellant took the view that the service rendered by them would be covered by the newly introduced service and not by Business Support Service and so for the period May 2007 to January 2008 they filed refund claim.
In the balance sheet for the year 2007-2008 which was prepared after filing the refund claim, they showed the amount as “receivable from the department”.
The original authority accepted the classification issue but rejected the refund claim on the ground of unjust enrichment and transferred the amount to the Consumer Welfare fund.
As the Commissioner (Appeals) rejected their appeal, the appellant is before the CESTAT.
It is submitted that from 2008 onwards they had been showing in their Books of Accounts the said amount as receivable and, therefore, there is no question of passing on the burden of service tax to their customers. The following case laws are relied in support Virudhunagar Textile Mills Ltd. 2008-TIOL-131-HC-MAD-CUS , Pride Foramer 2006-TIOL-598-CESTAT-MUM, Saralee Household &Bodycare India (P) Ltd. 2006-TIOL-1737-CESTAT-MAD, Thales-E-Transaction CGA 2006-TIOL-561-CESTAT-DEL & Fiat India Pvt. Ltd. 2008-TIOL-448-CESTAT-MUM.
The Revenue representative referred to the agreement entered with the customer and which specifically stated that the rates quoted by them are inclusive of all taxes and levies;that while quoting the rates, appellant had taken into account the service tax element and, therefore, burden of service tax has been passed on to the customer.
The Bench inter alia observed -
++ I find that the agreement very clearly states that the rate mentioned are inclusive of all taxes and levies. I have also gone through the invoices produced. It is seen that the appellants have been charging based upon the quantity of the concrete pumped through the equipment installed by them and the rate is fixed on that basis. Thus, the charges are not in the nature of rental for a particular day or particular period but with reference to the work performed. Invoices do not indicate any tax element separately. Under the circumstances, it has to be held that the rates quoted and amount collected are inclusive of service tax.
++ Since the appellant has not brought any evidence to indicate that they have refunded any service tax to their customers in my view the doctrine of unjust enrichment would be applicable in the facts and circumstances of the case. Appellant had no doubt about the applicability of tax during the relevant period. The fact that in the balance sheet for 2007-08, which was prepared after filing the refund claim shows the amount as receivable will not make any difference in the peculiar facts and circumstances of the present case.
++ The facts and circumstances in the present case are not comparable to any of the cited case laws and would, therefore, not be applicable.
The appeal was dismissed.
(See 2014-TIOL-818-CESTAT-MUM)
