2025-VIL-1069-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Export of Service, Filing of refund claim by recipient of service, Locus Standi of service recipient– Appellant, Singapore-based company, appointed an Indian entity as its collecting representative. The Indian entity was to collect payments, retain a 1% commission, and remit the balance in foreign exchange. The Indian representative erroneously paid service tax on the entire value of remittances instead of only on its commission, effectively paying tax on exported services. The appellant, as the recipient of the service who ultimately bore the tax burden, filed a refund claim – Rejection of refund on the grounds that the applicant was not registered for service tax in India and had not paid the tax itself - Whether a foreign entity, not registered under service tax law in India and not being the assessee who deposited the tax, has the locus standi to file a refund claim under Section 11B of the CEA, 1944, as the person who has ultimately borne the incidence of the wrongly paid tax - HELD - The refund provisions in the Central Excise Act, 1944, as applied to the Finance Act, 1994, are abundantly clear that a claim for refund is not a vested right exclusive to an assessee but is available to 'any person' - The lower authorities erred in holding that only an assessee could claim restitution of tax paid in excess. The statute uses the term 'any person', and the original authority failed to justify how the appellant, as the recipient of the service, did not fall within this definition. The principle of 'unjust enrichment', enshrined in tax statutes, permits the retention of a refund amount in 'The Fund' only when the identity of the person who actually bore the tax incidence is unknown; it implies that the person who did bear the incidence is entitled to claim it at any time. The rejection of the claim solely on the ground of the claimant not being the registered assessee is incorrect - The impugned order is set aside and the refund application is restored to the original authority for a fresh disposal after duly considering the legal issues and factual circumstances presented by the appellant - The appeal is disposed of - Whether the lower appellate authority can decide a refund claim by introducing new grounds, such as the nature of the service and its classification, without putting the claimant on notice of such deficiencies and providing an opportunity to be heard - HELD - It is surprising that the first appellate authority ventured into determining the nature of the service and whether it qualified as an export, especially when the original authority's rejection was brief and based on a different ground. The original authority had not determined whether tax was collected in excess or whether the tax liability was correctly discharged. The first appellate authority, in taking the place of the original authority, could not have considered these new aspects without first issuing a notice to the applicant. The issues were decided by the lower authorities without placing the appellant on notice of any deficiency that impeded the processing of the refund claim. This action is a violation of the principles of natural justice.
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