ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against Order-in-Appeal dated 22.11.2004 wherein the appellate authority allowed the refund claim of the respondent.
2. The relevant facts that arise for consideration are that the respondent is a proprietorship concern and has been providing Hire Purchase Services. He obtained service tax registration and under the mistaken impression that he requires to pay the service tax under the category of Bank and other financial services, he paid the service tax for the period July, 2001 to June, 2002. Subsequently, he came to know form the Board’s clarification F. No. B 11/1/2000 dated 9.7.2001 that the services under the category of banking and financial services provided by the individual, proprietorship concern, or partnership concern will not got covered under the service tax net. Relying upon this Circular the respondent filed a refund claim indicating that he has paid the service tax under the mistaken provision of law. The said refund claim was rejected by the Adjudicating Authority and on appeal the appellate authority allowed the appeal of the respondent. Hence, this appeal.
3. Learned D.R. submits that the amount paid by the respondent though may be under the mistaken identity but he is aware that it is service tax which has been deposited by him with the Government. He submits that the respondent did not produce any proof or evidence regarding non-collection of this amount from their customers. He relies upon the decision of the Hon’ble Supreme Court in the case of SRF Ltd. v. ACCE, Trichy as reported at .
4. Learned Advocate appearing for the respondents submits that the service tax paid by them is absolutely under the mistaken identity as a fact and is not at all leviable on him. This is clear from the fact that even the Board’s Circular dated 9.7.2001 is clearly said so, that proprietorship and partnership are excluded from the service tax net. He further submits that he has produced the proof of non-passing over of the service tax to the authorities in his reply dated 26.4.2004. Hence, he submits that his refund claim is justified and the Commissioner (Appeals) has come to the correct conclusion.
5. Considered the submission made by both sides and perused the record. It is not in dispute that the respondent is a proprietorship concern and is conducting business of Hire Purchase services. It is also not in dispute that the respondents got registered for payment of service tax under the banking and financial services and has paid service tax for the period July, 2001 to June, 2002. The Board vide its letter dated 9.7.2001 at Para 2.1.1 has clarified that no service tax is applicable on proprietorship firms rendering hire purchase activities. In view of this clarification issued by the Board it is very clear that the respondent is not liable to pay any service tax and he has paid it under the misunderstanding of law. Since the amount collected by the government is not at all payable by the respondent this amount would resemble the amount collected without any authority of law. Since the government has no authority to collect this amount from the respondent the respondent is eligible for the refund of this amount.
6. Hon’ble Supreme Court in the case of SRF Ltd. has also decided that unconstitutional levy is refundable.. In Para 7 the Apex Court has held that “secondly, assuming to be a case of unconstitutional levy still the appellants would not be entitled to refund in terms of law settled by Mafatlal Industries case. Even in that eventuality it has to be established the incidence of duty has not been passed on to others.” In the case before me the respondent has produced before the authorities the contract of hire purchase entered by them with their customers. [From the mere perusal of the said contract it seems that there is no element in this contract which indicates that the respondent has passed on the incidence of service tax to his customers. But in the interest of justice since the Order-in-Original is silent on this issue, it would be proper to remand the matter back to the original authority to examine the non-passing of incidence of service tax, as may be produced by the respondent either in the form of Chartered Accountant certificate or in the form of records kept by him and then come to a decision on the refund claim of the respondent. Appeals are allowed by way of remand only for the purpose of verifying the claim of the respondent in respect of non-passing over of the service tax to their customers. Appeal allowed by way of remand for a limited purpose.
(Dictated & pronounced in the Open Court.)
