Service tax refund on excess billing credited back to customer is not barred by unjust enrichment

Service tax liability was confined to the amount actually realised for the taxable service, not the higher amount initially billed. Where the excess tax was credited back to the customer through a credit note, the refund was not barred by unjust enrichment and adjustment and refund were available under the service tax framework. The Tribunal held that Central Excise refund precedents were inapplicable because they concerned a different taxable event and a different statutory setting. On the facts, the assessee was entitled to refund of the excess service tax paid.

---

---

Issues: Whether refund of excess service tax paid on bills raised before discount, after the excess amount was credited back to the customer, was barred by unjust enrichment and whether the Central Excise refund precedents applied to service tax.

Analysis: The taxable event in service tax is the realisation of payment for the taxable service, not the mere rendering of service or the raising of a bill. Where the final amount realised is lower than the billed amount, tax is payable only on the amount actually received. The service tax framework also recognises adjustment where the taxable service is not provided wholly or partly and the tax paid thereon is refunded to the person from whom it was received. The cited Central Excise decisions were held to be inapplicable because they turned on a different taxable event and a different statutory setting. The record showed that the excess tax had been returned to the customer by credit note.

Conclusion: The refund was not hit by unjust enrichment and the assessee was entitled to adjustment and refund of the excess service tax paid.

Ratio Decidendi: In service tax matters, liability is confined to the amount actually realised for the taxable service, and excess tax refunded to the recipient permits adjustment and refund under the service tax rules, making Central Excise refund principles on post-clearance adjustments inapplicable.

---