Refund of service tax on export of service survives unjust enrichment and limitation tests when tax burden is not passed on.

Refund of service tax paid on export of service is not barred by unjust enrichment where the invoices and record show that the tax incidence was not passed on to the overseas customer, and the department fails to prove otherwise. The refund is also within limitation where Section 83 of the Finance Act, 1994 applies Section 11B of the Central Excise Act, 1944 and, in the residuary category, the relevant date is the date of payment of duty. On those facts, the refund claim filed within one year from payment was timely and admissible with consequential relief.

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Issues: (i) Whether refund of service tax paid on export of service was barred by unjust enrichment; (ii) Whether the refund claim was barred by limitation under the applicable refund provisions.

Issue (i): Whether refund of service tax paid on export of service was barred by unjust enrichment.

Analysis: The services rendered to overseas clients were treated as export of service, and the invoices showed that service tax incidence had not been passed on to the customers. Where tax is paid on an export transaction that was not liable to tax, the credit position is required to be restored and the cash payment is refundable if the incidence has not been passed on. The department failed to establish passing on of tax burden.

Conclusion: The bar of unjust enrichment did not apply and the refund was admissible.

Issue (ii): Whether the refund claim was barred by limitation under the applicable refund provisions.

Analysis: Section 83 of the Finance Act, 1994 makes the refund provisions of Section 11B of the Central Excise Act, 1944 applicable to service tax. In a case not covered by the specific clauses in the Explanation to Section 11B, the relevant date is the date of payment of duty. Since the amount was paid on 05.02.2011 and the refund claim was filed on 28.07.2011, the claim fell within one year from the relevant date.

Conclusion: The refund claim was within limitation.

Final Conclusion: The denial of refund was unsustainable, and the assessee was entitled to refund with consequential relief.

Ratio Decidendi: Refund of tax paid on an export of service is not defeated by unjust enrichment where the tax burden has not been passed on, and limitation is to be tested under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 using the date of payment as the relevant date in the residuary category.

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