Non-voluntary service tax payment on audit objection can still support refund, subject to verification of recipient evidence.

Service tax paid in response to an audit objection was treated as non-voluntary, so the payment could not be denied refund on the ground that it was made of the assessee's own volition. The assessee supported the refund claim with its balance sheet, rent agreement and a certificate from the service recipient showing that service tax had not been charged, which established a prima facie entitlement to refund on the basis of threshold exemption. The refund sanctioning authority was nevertheless required to verify the evidence of non-charging from the recipient before granting the claim, and the matter was remanded for that verification and sanction.

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Issues: Whether service tax paid on account of an audit objection was a voluntary payment so as to bar refund, and whether the assessee was entitled to refund on the basis of threshold exemption.

Analysis: The amount was paid in response to the audit objection and not on the assessee's own volition, so the payment could not be treated as voluntary for denying refund. The assessee had produced the balance sheet, rent agreement, and a certificate from the service recipient showing that service tax was not charged. On that basis, the assessee established a prima facie entitlement to refund, but the refund sanctioning authority was required to verify the evidence relating to non-charging of service tax from the recipient before sanctioning the claim.

Conclusion: The assessee was held entitled to refund, and the matter was remanded to the adjudicating authority for verification and sanction in accordance with the stated condition.

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