1. These four appeals are against common impugned order dated 31.10.2012 of Commissioner (Appeals), Central Excise, Delhi-I. These four appeals were with reference to rejection of refund of service tax claimed by the appellant for the export of services during the period May, 2006 to Feb. 2009. The issue involved in all these appeals are identical and are accordingly taken up together.
2. The brief facts of the case are that the appellant is a company incorporated outside India and is engaged in the business of providing money transfer services in various countries including India. Various customers approach the appellant's office in different places abroad for remitting money to their relatives or friends in India. The money and the fee for such remittance are collected abroad by the appellant's office. The customers are provided an unique code. This code is passed on by the customers to the recipient of money in India, who on the basis of this secret code approaches the Indian agent of the appellant. On the basis of the submission of the said code, money is given to the recipient. Thereafter, the Indian agent of the appellant collects the principal money and also commission for such work from the appellant. The appellant have entered into a Representative Agreement with Post & Telegraph Department of India. As per the agreement, P & T is under obligation to transfer the money to the designated nominee located in India on behalf of the appellant. This arrangement is created as the appellant have no persons in India. For better appreciation of the facts, the arrangement has been presented in a flow char
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t by the appellant. We have perused the same.
3. The appellant have such Representative Agreement with various agents in India. The question of service tax liability on this arrangement has been subject matter of dispute. In respect of some of the agents of the appellant doing identical service in connection with the transfer of money from abroad to India, the service tax liability was examined by the Tribunal. It was held that such services were actually exported to a recipient situated abroad and no tax liability will arise in India.
4. P & T acting as agent of the appellant in terms of Representative Agreement paid service tax erroneously and collected the same from the appellant on such services. On this basis, the appellant filed refund claims covering different periods. These claims were examined by the Original Authority and were rejected. The Original Authority held that the money transfer service is covered under the "Business Auxiliary Service" and service tax has been correctly discharged on the same. The Original Authority held that the Department of Post has made payment to recipient in India on the basis of the instructions of the appellant. No portion of money transfer service has been performed outside India as claimed by the appellant and accordingly, the Original Authority concluded that the Department of Post provided services in India and there is no export of service. He further held that the Department of Post has passed on the service tax burden to the appellant. The appellant has not submitted any documentary evidence to prove that the service tax collected by the Department of Post and reimbursement by the appellant had not been passed on to any other person. Accordingly, the Original Authority held that the appellants are not eligible for refund both on merits as well as on the principle of unjust enrichment. On appeal, vide the impugned order, the Commissioner (Appeals) upheld the rejection of refund claims. He affirmed that the transactions are correctly subjected to service tax, there is no export of service. He observed that though rejection of refund under doctrine of unjust enrichment may not be necessary, considering the facts, he held that the claim of the appellant would deserve rejection based on the doctrine of unjust enrichment.
5. In the above background, the appellant preferred these appeals contesting the findings of the lower authorities both on merit and on unjust enrichment.
6. Ld. Counsel appearing for the appellant submitted that the appellants have identical arrangement with various other agents other than the Department of Post to provide the money transfer service to the recipient in India. Relying on the following decisions of the Tribunal, he submitted that on merit, the case has been well settled in favour of the appellant and the impugned order is not legally sustainable on this issue.:-
(a) Paul Merchants Limited and Ors.: 2012 - TIOL-1877-CESTAT-DEL
(b) Wall Street India Finance Ltd. : 2015 (37) STR 642 (Tribunal-Mumbai)
(c) Muthoot Fincorp. Ltd. - 2009-TIOL-2256-CESTAT-BANG
(d) Bird Travels P. Ltd. : 2016 (45) STR 143 (T-Delhi)
(e) Airbus Group India P. Ltd. : 2016 (45) STR 120 (T-Delhi)
7. Further, ld. Counsel submitted that the Commissioner (Appeals) relied on a stay order of the Tribunal in the case of Weizmann Forex Ltd. : 2012 (26) STR 253 (Tribunal-Mumbai). The said appeal has been finally decided in Wall Street India Finance Ltd. (supra). The service rendered by Weizmann Forex Ltd. (supra) to Western Union is held to be export of service not liable to service tax.
8. Ld. Counsel submitted that the show cause notice issued to the appellant to reject the refund claim only raised grounds of no-export of service and time bar. The question of unjust enrichment was not at all raised. Hence, it is not open to the lower authorities to proceed on a fresh ground in the adjudication. Reliance was placed on various decided cases to support this assertion. Without prejudice to the said submission, the ld. Counsel submitted that the doctrine of unjust enrichment has no application in respect of refund claims involving export of services, which are made as per Section 11B (2)(a) of the Central Excise Act, 1944. Reliance was placed on the following decisions of the Tribunal:-
(a) Commissioner of Service Tax Vs. Pulcra Chemicals (India) Pvt. Ltd. : 2015 (39) STR 700
(b) CST Vs. Wienerberger Brick Industries Pvt. Ltd. : 2014 (34) STR 860 (Tribunal-Bang.).
(c) Vodafone Cellular Ltd. : 2014 (34) STR 890 (Tribunal-Mumbai)
(d) CST, Ahmedabad Vs. M/s. Mohanlal Services : 2009 - TIOL-2068-CESTAT-AHM (Page 315-317 of the Appeal)
9. Even otherwise, without prejudice to the above two submissions, the ld. Counsel further submitted that there is no unjust enrichment in the present case as per facts established by the appellant. The principal amount along with fees for transferring such amount is collected from the customers by the appellant in advance in the foreign country. The amount will be remitted to the recipient in India through any of the numerous agents of the appellant providing such service. The Department of Post is one such agent only. At the time of remitting the principal amount with the appellant in the foreign country, neither the customer nor the appellant would know that the amount will be delivered through Department of Post or any other similarly situated agents of the appellant. The overseas customers transfer the money to the beneficiaries and the considerations for the same is free from any possible tax in India. The rates are uniform and do not vary for remittance through Department of Post. The ld. Counsel submitted that they have due certification by the Chartered Accountant in support of the assertion. Ld. Counsel finally prays that the appellants are eligible for refund on merit and the doctrine of unjust enrichment has no application in the present case. He prayed for setting aside the impugned orders and allowing the appeal with consequential benefit.
10. Ld. AR contested the appeals on the ground that the appellants did not pay service tax to the Government. Such service tax has been paid by the Department of Post. The appellants reimbursed the said service tax to the Department of Post. The services, which are taxed, at the hands of the Department of Post are essentially with reference to remittance of money to the recipient in India.
11. Contesting the grounds of appeal to the effect that the lower authorities proceeded beyond the scope of show cause notice while examining the doctrine of unjust enrichment, the ld. AR submitted that the statutory requirements of Section 11B are to be considered by the competent authority before any refund amount is sanctioned and given to the claimant. There is no legal infirmity in the examination of the said statutory requirements by the Original Authority, which was affirmed by the impugned order.
12. We have heard both the sides and perused the appeal records.
13. First, we consider the claim of the appellant for refund on merit. The arrangement involved in the transfer of money from a customer located abroad to an Indian recipient has been explained earlier in this order. These facts are not in dispute. The fact that appellants are not involved in providing any taxable service in India is also not in dispute. The refunds now claimed are for service tax paid by the Department of Post to the Revenue, with reference to such money transfer service performed by the Department of Post in pursuance of Representative Agreement. The said service tax paid by the Department of Post to the Government was in turn re-imbursed/paid by the appellant to the Department of Post. The Department of Post has not preferred any refund claim. The appellants are claiming such refunds. The tax liability of such services has been a subject matter of various decisions by the Tribunal. Dealing with one of the agents of the appellant engaged in transfer of money from abroad to a person in India, the Tribunal in the case of Wall Street Finance Ltd.- 2015 (37) STR 642 (T-M) has observed as below:-
"5.1 There is no dispute about the certain basic facts involved in the appeal. The service recipient in the transaction is M/s. Western Union, who is situated abroad. There is also no dispute that consideration for the service rendered has been received in convertible foreign exchange. The only dispute is where the service has been rendered. At the relevant time, there were no specific rules to determine the place of provision of service in Service Tax law. However, with effect from 20-6-2012 a specific Rule has been prescribed called Place of Provision of Service Rules, 2012. Though these Rules are only prospective in nature, the provisions of these Rules can be gainfully used to understand the concept of place of provision. Rule 3 of the Rules says that the place of a provision of a service shall be the location of the recipient of the service. In the facts of the case before us, the service receiver is M/s. Western Union, who has paid the consideration for the service and who is situated outside India and therefore, the place of provision of service should be treated as falling outside India.
5.2 In an identical set of facts in the case of Paul Merchants Ltd. (supra) and Fine Forex Pvt. Ltd. (supra), this Tribunal held that the transaction would amount to export of service and hence no Service Tax would be leviable. Following the ratio of these decisions and applying the same to the facts of the case before us, we are of the view that the services undertaken by the appellant to Western Union amounts to export of service and hence, not taxable in India."
14. In case of "Business Auxiliary Service" which is listed in the Rule 3(1)(iii) of Export of Service Rules, 2006, the place of provision of service shall be determined by the location of recipient of such service. In the present case, the Department of Post is rendering service to the appellant by executing the remittance of foreign exchange to the intended recipient in India. For this, they are receiving the considerations from the appellant. The services are availed by the appellant, who is a foreign based entity. This is to be considered as export of service as held by the Tribunal in various cases.
15. Reliance placed by the impugned order on the interim order of the Tribunal in Weizmann Forex Ltd. (supra) is both mis-placed and incorrect. First of all, he has relied on an interim order. In any case, the matter has been finally decided by the Tribunal in Wall Street India Finance Ltd. (supra), wherein Weizmann Forex Ltd.(supra) is one of the party. The Department of Post is not rendering any taxable service in India in the present arrangement. The recipient of service is not the recipient of transferred money in India. He did not pay any consideration for such receipt facilitated by the Department of Post. As such, we hold that the lower authorities have fallen in error in holding that the services in dispute are not exported.
16. On the second issue of applicability of doctrine of unjust enrichment, we note that the appellant raised a preliminary objection against the order of the lower authorities on the ground that this was never alleged in the show cause notice proposing rejection of the refund claims. As such, it was pleaded that the lower authorities acted beyond the scope of show cause notice. We are not convinced by the said technical objection. Though the Original as well as the first Appellate Authority rejected the claims on merit, they also gave a finding on the question of unjust enrichment. We have held in favour of the appellant on merit, and necessarily have to also examine the doctrine of unjust enrichment in the present case. The lower authorities are bound to examine the statutory requirements of such principle before actually sanctioning the amount to the claimant. There is no infirmity in scrutiny. The correctness of the findings can be contested.
17. The appellant pleaded that the doctrine will not affect the present claims. Their argument is two fold. First, they have never passed on service tax liability paid by them to the Department of Post to any third party. Towards this effect, they have submitted certificate by Chartered Accountant and also by explaining the billing arrangement for such money transfer. Admittedly, the appellants have uniform rate schedule for transferring the money for the customer, who approached them outside India. The appellants do have multiple agents to arrange the remittance of such transfer money to the recipient in India. There is no element of tax or additional considerations, which was collected by the appellant from such customers in foreign country, which can be attributed to service tax. The Original Authority observed that the appellant has not submitted documentary evidence to the effect that incidence of service tax collected by the Department of Post and reimbursed by the appellant had not been passed on to any other person. We find that such summery finding is not factually sustainable. The appellants have categorically submitted that their customers, who approached them to remit foreign exchange from outside the country to a recipient in India, do not pay any consideration, which can be directly or indirectly attributable to service tax. This, they have established by directly as well as by inference. Supporting certificate from Chartered Accountant, who examined their business arrangement and accounting has also been submitted. As such, the appellants have discharged their liability to state that they have not passed on any tax burden to any third party in the present dispute.
18. The second submission of the appellant is to the effect that for export of service, the concept of unjust enrichment itself will not apply. To support this contention, they relied on various decided cases. The Tribunal in Pulcra Chemicals (India) Pvt. Ltd. (supra), Wienerberger Brick Industries Pvt. Ltd. (supra), Vodafone Cellular Ltd. (supra) and M/s. Mohanlal Services (supra) held that with reference to refund claims relating to export of services the principle of unjust enrichment would not be applicable as provided in Section 11B of the Central Excise Act, 1994.
19. In view of the above analysis and applying the ratio of the decided cases, we hold that the impugned orders denying refund claimed by the appellants are not sustainable. Accordingly, the same are set aside and the appeals are allowed with consequential relief as per law