Refund of Service Tax on exempt railway transport upheld where STTG certificate showed no passing on of tax burden.

Refund of Service Tax collected on exempt railway transportation of petroleum products was held maintainable in the hands of the service recipient, because refund lies with the person who actually bore the tax burden and did not pass it on. The Railway-issued STTG certificate, supported by the Ministry of Railways circular and Rule 9(1)(fa) of the Cenvat Credit Rules, was treated as acceptable evidence for refund or credit. On the facts, the certificate established that unjust enrichment did not apply, so the refund was not barred and consequential relief followed.

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Issues: Whether the recipient of railway transportation service was entitled to refund of Service Tax collected on exempt transportation of petroleum products, and whether the claim was barred by unjust enrichment.

Analysis: The refund claim was examined in the light of the principle that a refund can be claimed by the person who has borne the tax burden and has not passed it on. The availability of refund to the recipient of service was treated as settled law. The Railway-issued STTG certificate, supported by the Ministry of Railways circular, was recognised as a valid basis for refund or credit. The amendment made by Notification No. 26/2014-C.E. (N.T.) inserting Rule 9(1)(fa) of the Cenvat Credit Rules, 2004 further supported the evidentiary value of the STTG certificate. The certificate filed to verify unjust enrichment showed that the burden had not been passed on.

Conclusion: The refund claim was held to be maintainable by the recipient and not hit by unjust enrichment.

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

Ratio Decidendi: Where Service Tax has been collected on an exempt service and the claimant establishes, through acceptable evidence, that the tax burden was not passed on, refund can be granted to the recipient of the service.

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