20 February, 2012

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Unjust Enrichment Cannot Be A Ground For Rejection Of Refund Claim

Unjust enrichment cannot be made as a ground for rejection of refund - Case shall be first decided on merits and thereafter principle of Unjust Enrichment to be applied.

If the refund is admissible on merit, thereafter, the issue of unjust enrichment is required to be decided. 

If the refund claim is found to be hit by bar of unjust enrichment, the same is required to be directed to be placed in the account of welfare fund. As such, the only circumstances on the  principle of unjust enrichment would be that the refund, which is otherwise admissible to the assessee, is not required to be given to him, but to be placed in the account of welfare fund. As such, it is absolutely necessary to first decide as to whether the refund claim is otherwise admissible or not.

Case Law :- Hughes Communications India Ltd. Versus C.S.T., New Delhi 
  

Full Text of the Order as Below :-

2011 -TMI - 210669 - CESTAT, NEW DELHI
Other Citation: 2011 (24) S. T. R. 446 (Tri. - Del.)

Hughes Communications India Ltd. Versus C.S.T., New Delhi

No. - ST/256 of 2008
Dated - 09 September 2011

Refund claim - Unjust enrichment cannot be made as a ground for rejection of refund - Case shall be first decided on merits and thereafter principle of Unjust Enrichment to be applied.
Judgment / Order
Mrs. Archana Wadhwa, Mr. Mathew John, JJ.
Appearance:
Shri B.L. Narasimhan, Advocate  for the appellants
Shri Sunil Kumar, Authorized Departmental Representative (DR) for the Revenue
Per Mrs. Archana Wadhwa:
After hearing both sides, we find that the dispute is in respect of refund claim filed by the appellants on the ground that the services undertaken by them were not covered under the taxable services and the service tax deposited by them was liable to the refunded to them. It is seen that the original adjudicating authority decided the issue on merit as also on the point of unjust enrichment. The refund claim was rejected on both the above points.
2. On an appeal against the above order, the Commissioner (Appeals) did not go to the merit of the case but rejected the appeal on the ground that the appellants have recovered  the service tax from their customer and as such were hit by bar of unjust enrichment.
3. It is the grievances of the ld. Advocate of the appellants that the refund claim cannot be rejected on the ground of unjust enrichment, without first deciding the merit of the case. It has to be first held as to whether such refund is admissible on merit or not and it is only thereafter, the issue on unjust enrichment would come into play.
4. We agree with the Ld. Advocate for the  appellants. Unjust enrichment cannot be made as a ground for rejection of refund claim, which has to be first decided on merit. If the refund is admissible on merit, thereafter, the issue of unjust enrichment is required to be decided. If the refund claim is found to be hit by bar of unjust enrichment, the same is required to be directed to be placed in the account of welfare fund. As such, the only circumstances on the  principle of unjust enrichment would be that the refund, which is otherwise admissible to the assessee, is not required to be given to him, but to be placed in the account of welfare fund. As such, it is absolutely necessary to first decide as to whether the refund claim is otherwise admissible or not. Inasmuch as the Commissioner (Appeals) has not given any decisions on merit in respect of admissibility of refund claim, we set aside the impugned order and remand the matter to the Commissioner (Appeals) for deciding on merit of the case and thereafter, the other relevant issues. Appeal is disposed of in the above terms.
 








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