By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether when tax was paid by reverse calculation on entry fees received from non-members would tantamount to unjust enrichment and thus denial of refund?
Facts:
Service tax erroneously paid by assessee club on entry fee received from non members by working backwards from the gross fee as the same was not collected. The invoices evidenced this fact. Both lower authorities held that the assessee club was not liable to service tax. The refund claim for the mistakenly paid tax was rejected by the department. However, the revisionary authority held that the respondent was eligible for refund. Relying on the case of V. S. Infrastructure Ltd. 2012 (25) STR 170 (Tri–Del) containing identical fact, it was pleaded that there was no unjust enrichment. Revenue filed an appeal on the grounds that the charges collected from both members and non-members were inclusive of service tax. Thus, service tax was said to be collected from the client. Thus, the amount so collected as representing service tax was required to be paid u/s. 73A(2) which was rightly done. Thus, subsequent refund of such amount did not arise as it would tantamount to unjust enrichment. According to the Respondent, the adjudicating authority, in his order specifically recorded the finding “copy of the invoice reflects that there is no service tax and consequently receipt of non-membership income is without service tax.”
Held:
The Respondent paid service tax on the income received from the non-members, working backwards to determine service tax liability. Adjudicating authority recorded a factual finding that the respondent did not charge service tax on any amount which had been charged to the nonmembers and the provisions of section 73A of the Finance Act, 1994 are not attracted. The facts of the case V. S. Infrastructure (supra) being similar to the facts herein, it is settled that the question of unjust enrichment does not arise.
