Unjust enrichment in service tax refund turns on whether tax incidence was passed on to customers; refund allowed.

A refund claim under service tax was examined on the question whether it was barred by unjust enrichment, namely whether the tax incidence had been passed on to customers. The claim was supported by the position that the service provider received only commission for the service rendered and had not collected any service tax from the service recipient. The delayed deposit of service tax after the service period and receipt of consideration also supported the conclusion that the tax burden was borne by the claimant. The refund was therefore held admissible and the unjust enrichment bar was not attracted.

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Issues: Whether the refund claim was hit by unjust enrichment, specifically whether the service tax incidence had been passed on to the customers.

Analysis: The refund was claimed on the basis that the respondent received only commission for the service rendered and did not collect any service tax amount from the service receiver. The supporting circumstances also indicated that the service tax was deposited much after the period of provision of service and receipt of consideration. On that basis, the appellate authority concluded that the burden of service tax had been borne by the respondent and that the doctrine of unjust enrichment did not apply.

Conclusion: The refund was held to be admissible and the bar of unjust enrichment was not attracted.

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