Erroneous ST-3 return entry cannot by itself defeat a service tax refund where supporting records verify the correct facts.

An erroneous entry in an ST-3 return did not, by itself, justify refusal of a service tax refund where the supporting financial records established the correct position and the claim could be independently verified. The refund was also not treated as involving double benefit, because the amount already adjusted in the returns was excluded and no passing on to third parties was shown. The claim therefore remained assessable under the refund framework, subject to arithmetical verification, and rejection solely on the basis of the return entry was unsustainable.

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Issues: (i) Whether an erroneous data entry in the ST-3 return could, by itself, bar refund of excess service tax; (ii) whether the refund claim involved any double benefit or failure to satisfy the requirements of refund under section 11B.

Issue (i): Whether an erroneous data entry in the ST-3 return could, by itself, bar refund of excess service tax.

Analysis: The excess refund claim was rejected only because the ST-3 return reflected adjustment of a larger amount under Rule 6(3) of the Service Tax Rules, 1994. The record showed that the appellant produced supporting financial data and that no discrepancy was found in that material. The return was treated as conclusive, even though the appellant asserted that the figure was entered by mistake and the claim could be verified independently. The statutory scheme, including self-assessment and scrutiny of returns, did not justify refusing refund merely on an apparent return-entry error when the underlying facts were verifiable.

Conclusion: The erroneous ST-3 entry did not, by itself, bar the refund claim, and the rejection on that ground was unsustainable.

Issue (ii): Whether the refund claim involved any double benefit or failure to satisfy the requirements of refund under section 11B.

Analysis: The claimed refund amount excluded the sum that had already been adjusted in the returns, and the figures showed that no double recovery was being sought. The claim was to be considered under section 11B of the Central Excise Act, 1944 as applicable to service tax refunds, and the question of unjust enrichment had to be examined on the facts. On the material placed, the refund was not shown to have been passed on to third parties, and the objection of double benefit was not made out.

Conclusion: The claim did not amount to double benefit, and the refund was not barred on that ground.

Final Conclusion: The rejection of the refund was set aside because the claim had been dismissed without proper verification of the underlying facts, and the matter was held fit for refund subject to arithmetical verification by the Revenue.

Ratio Decidendi: A refund claim cannot be rejected solely because of an apparent error in a self-assessed return when the supporting material establishes the correct factual position and the statutory requirements for refund are otherwise satisfied.

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