Retrospective service tax exemption and unjust enrichment permitted refund to the recipient, while unclaimed interest refund was rejected.

Retrospective exemption under Section 102 of the Finance Act, 1994 made the service tax refundable, and unjust enrichment did not bar crediting the refund to the service recipient because the recipient had borne the tax and authorised the claim on its behalf. The refund was therefore to be released to the recipient's account. The request for refund of interest on delayed tax payment failed because no such claim was made in the refund application, and the interest was otherwise paid when tax was admittedly due at the relevant time.

---

---

Issues: (i) Whether refund of service tax paid on services rendered to the Ministry of Defence was admissible in view of retrospective exemption and the doctrine of unjust enrichment; (ii) Whether refund could be sanctioned to the service recipient on the basis of its request; (iii) Whether refund of interest paid on delayed payment of service tax was entertainable.

Issue (i): Whether refund of service tax paid on services rendered to the Ministry of Defence was admissible in view of retrospective exemption and the doctrine of unjust enrichment.

Analysis: The service tax liability stood exempt retrospectively under Section 102 of the Finance Act, 1994. The refund claim was examined in the context of Section 11B(2)(e) of the Central Excise Act, 1944, which permits refund to the person who has borne the incidence of tax. Since the service recipient had borne the tax and had also requested that refund be processed on its behalf, the bar of unjust enrichment did not prevent grant of refund to the recipient.

Conclusion: Refund of the service tax was held admissible, but it was to be credited to the service recipient, not retained by the appellant.

Issue (ii): Whether refund could be sanctioned to the service recipient on the basis of its request.

Analysis: The service recipient's letter specifically directed the appellant to file the refund claim on its behalf and requested credit of the sanctioned amount into its account. On that basis, the appellant was treated as having filed the claim for and on behalf of the recipient, and the adjudicating authority was directed to release the refund to the recipient's account after furnishing its details.

Conclusion: Refund was directed to be sanctioned in favour of the service recipient.

Issue (iii): Whether refund of interest paid on delayed payment of service tax was entertainable.

Analysis: The refund application did not contain any claim for refund of interest. Independently, the interest was paid when service tax was admittedly payable at the relevant time, so no refundable entitlement was established on that component.

Conclusion: The claim for refund of interest was rejected.

Final Conclusion: The appeal succeeded only to the extent that service tax refund was allowed to the service recipient, while the claim for interest refund failed.

Ratio Decidendi: Where tax has been borne by the service recipient and the recipient requests refund to be processed on its behalf, refund is permissible in favour of the recipient under the statutory refund framework notwithstanding a plea of unjust enrichment; a component not claimed in the refund application cannot be entertained later.

---