Decided on February 05,2015

Sbi Capital Markets Ltd. Appellant
Cce And Service Tax Respondents


M.V.RAVINDRAN,MEMBER (J) - (1.)THIS appeals is directed against Order -in -Appeal No. SB/39/LTU/MUM/2009, dated 22 -12 -2009. The issue involved in the aforesaid appeal is that the appellant had paid service tax on services (syndication of debt jointly with IDBI -falling under Banking & other financial services) provided to their customer. Bills for service charges were raised after payment on receipt of amount, service tax was paid, but the customer M/s. Essar Steel Ltd. (Hazira) refused to pay service tax stating that being them located at SEZ, they are not liable for service tax under Notification No. , dated 31 -3 -2004 and forwarded exemption certificate dated 12 -12 -2006, issued by Asst. Development Commissioner, SEZ, Surat. Appellant then filed refund claim with the Asst. Commissioner LTU, Mumbai along with requisite documents. After giving PH on 13 -3 -2009, the refund claim was sanctioned under order appealed against with directions to credit the same to the Consumer Welfare Fund. The sanctioning authority opined that as two entries were made in books of accounts, it cannot be convincingly accepted whether burden of service tax has not been passed to recipient and the same is not recovered from recipient. Aggrieved by the order of the adjudicating authority, the appellant preferred an appeal before the first appellate authority. The first appellate authority did not agree to the contention raised by the appellant and rejected the appeal, hence the appellant is before us.
Learned C.A. would took us through the entire records and submit that the appellant had demonstrated before both the lower authorities that the service tax which has been claimed as refund was not recovered from their client hence question of unjust enrichment would not arise. He also relied on with the Chartered Accountant's certificate as well as the affidavit, which indicate that the client had not paid service tax to the appellant. He also produced the bills as well as the ledger entries to substantiate his claim that the amount claimed as refund was never received by them from their client and shown in Balance Sheet as receivable.

(2.)LEARNED D.R. on the other hand, would submit that the bills which were raised by the appellant initially indicate inclusive of the service tax and in their reply to the show cause notice, they have stated that they have received the payment from their customer. He would submit that having received the amount from their client, the question of refunding the same would not arise.
(3.)WE have considered the submissions made by both the sides and perused the records. As already noted by us the issue is regarding refund of amount which have been paid by the appellant as service tax which according to them is not payable. There is no dispute that the amount which have been paid by the appellant as service tax were not payable as service recipient was situated in SEZ unit and were eligible to avail benefit of Notification No. , dated 31 -3 -2004. On perusal of the records produced before us we find that the appellant initially has raised the bills on their clients indicating the service tax liability. We find from the records and recorded by the adjudicating authority that the appellant's client had not paid the amount of service tax liability as indicated on the invoices. We went through the extract of ledger account which was produced before us by the appellant. We find merits in the contention raised by the appellant as the ledger account indicates that the service tax amount is payable by their client and subsequently on being informed by their client, they reversed the entries indicating that the service tax paid by them is receivable from Govt., department. We also find that the client namely M/s. Essar Steel Ltd. (Hazira) has submitted an affidavit, wherein they have categorically stated that the appellant had not charged any service tax nor was paid by them. The C.A's Certificate produced by the appellant indicates that the amount for which refund is sought is paid out of pocket of the appellant herein. In our considered view, both the lower authorities have not appreciated these evidences in the correct perspective. In our view, since the appellant herein has shown the entire amount of service tax liability as receivable and in support of which journal entries were produced, we find that the appellant is eligible for the refund of the amount as claimed. Accordingly, we allow the appeal filed by the appellant and hold that the appellant is entitled to the amount as refund. Impugned order is set aside to that extent and the appeal is allowed with consequential relief.
(Dictated in open Court)


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