Unjust enrichment does not bar refund of inadvertently paid service tax where the tax burden was not passed on.

Refund of service tax paid inadvertently was found not to be hit by unjust enrichment where the service recipient had not reimbursed the tax and the underlying services were not liable to service tax. On those facts, the incidence of tax was not passed on, so the refund claims remained maintainable. The decision relied upon by the Revenue was held inapplicable to refund claims under the service tax regime, and the appellant was held entitled to refund.

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Issues: Whether the refund claims for service tax paid inadvertently were barred by unjust enrichment and whether the claim was maintainable in view of the decision relied upon by the Revenue.

Analysis: The service recipient had not reimbursed the service tax to the appellant, as the underlying services were not liable to service tax and the tax had been paid inadvertently. On these facts, the incidence of tax had not been passed on, so the bar of unjust enrichment did not apply. The decision relied upon by the Revenue was held to be inapplicable to refund claims under the service tax regime.

Conclusion: The refund claims were held to be maintainable and the appellant was held entitled to refund.

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