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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal against the order of dismissal by the Commissioner (Appeals).

The appellant was engaged in providing works contract service to Garrison Engineers (MES) a unit of Department in the Ministry of Defense who was not engaged in any commercial activity. The said service was exempted from service tax before 01-04-2015 vide entry No. 12(a) of Mega Exemption Notification No. 25/2012-ST which was withdrawn and the above mentioning construction services became taxable with effect from 01-04-2015 subsequently by another notification the said entry was again inserted thereby exempting the service tax providing in relation to construction of noncommercial Govt. building from whole of service tax retrospectively. In view of which the appellant had filed a refund claim for the service tax paid.

Initially an amount of Rs 3,50,746/- for the period March, 2015 was rejected as time-barred and the refund claim of Rs 32,70,626/- was sanctioned but was credited to Consumer Welfare Fund being hit by unjust and enrichment. The said order was challenged before the Commissioner (Appeal) by the appellant who had allowed the refund claim of Rs 32,70,626/- to the appellant holding that the said amount be given back to the appellant who would in turn refund the same to the military, amount of Rs 3,50,746/-was rejected as time-barred. The revenue had filed an appeal before the Tribunal against the order of sanctioning refund claim which was dismissed and against the order of holding the refund of Rs 3,50,746/- as time barred an appeal had been filed by the appellant which was allowed holding that refund claim cannot be held time-barred and the appellant was entitled to claim of the amount paid for the period March, 2015.

Thereafter, the appellant made a request to the Assistant Commissioner to refund the amount, the adjudicating authority instead of complying the direction of Commissioner (Appeals) as well as the Tribunal transferred the whole of the amount of Rs. 36,21,376/- to the Consumer Welfare Fund holding that the same was hit by the principle of unjust enrichment. An appeal against the said order was filed before the Commissioner (Appeals) was also dismissed. Hence, the instant appeal.

The Tribunal explained that the said issue had been dealt in the judgment of A.P. Enterprises v. C.C.E & S.T. Panchkula, and it was to be decided whether the refund claim was hit by barred of unjust enrichment or not,

            “On going through the said letter, I find that in terms of Section 11B (2) (e), the person who has borne the tax, can file the refund claim. Therefore, the service tax in the impugned matter paid by the appellant is required to be refunded to the service recipient directly. In these circumstances, I hold that the refund of service tax paid by the appellant cannot be rejected. Therefore, I sanctioned the refund claim, but the same is payable in the account of service recipient directly. Therefore, the appellant is directed to provide all the details of the service recipient required for sanctioning the refund claim. If already provided by the appellant, the adjudicating authority shall sanction the refund claim to the service recipient directly within 30 days from the receipt of this order.”

The Tribunal while allowing the appeal relied on the case of the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India, (2011) 10 SCC 292 and held that the refund claim was to be given directly to the service recipient i.e Garrison Engineers (MES), therefore, the refund claim was allowed along with interest.[Verma Brothers v. C.C.E. & ST, Service Tax Appeal No. 60358 of 2020, decided on 01-12-2020]

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Authority for Advance Ruling, Chhattisgarh: The Members comprising of Kalpana Tiwari, Joint Commissioner of State Tax and Rajesh Kumar Singh, Additional Commissioner of CGST and Central Excise, held that a supplier is required to charge GST upon service recipient on the total amount including cost of diesel provided by recipient company for transportation of its goods.

Applicant herein (supplier) had an agreement for transporting cement of a company named Shree Raipur Cement (service recipient). It was agreed that the diesel required for said transportation would be provided by the service recipient. The applicant sought clarification as to whether the supply of diesel by the service recipient would be included or excluded while charging GST on freight amount to be charged by the applicant.

The Authority noted that in the instant case, the service recipient, i.e., cement company was providing diesel to the vehicles used by the applicant for transporting cement/clinker in the course of business of cement by the service recipient. Diesel so provided by it to the applicant, was an important and integral component of this business process, without which the process of supply of cement could not be materialised.

It was opined that as per Sections 7(1) and 15(2)(b) of the Central Goods and Services Tax Act, 2017 which define ‘supply’ and ‘value of supply’ respectively, any amount that the supplier is liable to pay in respect of supply but which has been incurred by the recipient of supply and not included in the price actually paid or payable for the goods or services or both, is includible in value of supply of goods/ services.

Thus, the applicant was required to charge GST upon Shree Raipur Cement on the total amount including the cost of diesel, i.e., on the total freight amount inclusive of the cost of diesel so provided by the service recipient.[Advance Ruling No. STC/AAR/10 A/2018, In an application filed by M/s Shri Navodit Agarwal, Order dated 26-03-2019]