CESTAT remanded a service tax refund claim to the adjudicating authority, requiring verification of unjust enrichment before rejection, emphasizing evidentiary burden on the department.
CESTAT Remands Service Tax Refund Over Unjust Enrichment
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) remanded a service tax refund application to the adjudicating authority, directing fresh verification on the issue of unjust enrichment. The tribunal ruled that a refund cannot be rejected solely on this ground without proper evidence or inquiry by the department.
The department had rejected the refund claim alleging that the appellant had passed on the tax burden to customers and thus was unjustly enriched. However, CESTAT found that the department failed to produce any material — such as invoices or pricing data — to substantiate the allegation.
"The burden of proving unjust enrichment lies on the department, and mere assertion is insufficient,"the tribunal held, citing Section 11B(2) of the Central Excise Act, 1944, which governs refund claims.
This ruling strengthens taxpayer rights in legacy service tax matters. Practitioners must insist on evidentiary support from authorities before accepting unjust enrichment as a basis for denial. The decision underscores the need for fair adjudication grounded in facts, not speculative allegations.
