Unjust enrichment barred refund of service tax where customer recoveries were treated as cum-tax amounts.

Refund of service tax paid under Business Auxiliary Service was considered notwithstanding that the tax liability on merits had not survived. The refund was refused on the separate ground of unjust enrichment because the amounts recovered from customers were treated as cum-tax receipts, so the tax element was held to have been passed on. The bills did not separately show service tax, but that did not rebut the factual inference of pass-through, and the Chartered Accountant's certificate was found insufficient to displace it. The refund was therefore held inadmissible.

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Issues: Whether the appellant was entitled to refund of service tax paid for the period June 2005 to March 2007 when the tax was held not payable on merits, but the refund claim was rejected on the ground of unjust enrichment.

Analysis: The appellant's refund claim arose from service tax paid under the category of Business Auxiliary Service for a period prior to the taxability of mining of mineral services. The finding that no service tax liability arose under Business Auxiliary Service remained undisturbed. However, the refund was examined on the separate question of unjust enrichment. The bills raised on customers did not separately show service tax, but the tax payment was worked out by treating the amounts recovered from customers as cum-tax amounts. On that factual basis, the amount recovered from customers was held to include the tax element. The Chartered Accountant's certificate was found insufficient to displace this factual inference, and the appellant failed to rebut the presumption that the incidence had been passed on.

Conclusion: The refund claim was barred by unjust enrichment and was not admissible.

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