CESTAT turns down refund claim rejection order
The Judicial Member took into account the decision followed in an earlier case
The Delhi branch of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has quashed an order rejecting the refund claim. It was done on the basis that the appellant had failed to pass the bar of unjust enrichment and observed that there was no provision in the law regulating the refund of penalty.
Under the category ‘Banking and Financial Institution Services’, the department had initiated the proceedings against the appellant, Rajasthan Financial Corporation for the payment of service tax and served a show-cause notice. On adjudication, the demand of service tax was confirmed along with interest and equivalent penalty.
On an appeal by the appellant, the Commissioner of Income Tax (Appeals) gave the benefit of payment of penalty under the wrong head. He maintained it was a procedural lapse on the part of the appellant. But said that the appellant had failed to pass the bar of unjust enrichment.
The Judicial Member Ashok Jindal, however, observed, “It is a case of a refund of penalty and for it there are no such provisions in law where the appellant is required to establish that they have to pass the bar of unjust enrichment.”
Citing the decision of the tribunal in an earlier case, it added, “The bar of unjust enrichment is not applicable to the facts of the case.”