Reverse charge service tax refund cannot fail on unjust enrichment where burden was not passed on and no Cenvat credit was taken.

Refund of Service Tax paid under reverse charge on freight for transport of oil cakes could not be denied on unjust enrichment where the assessee produced a Chartered Accountant's certificate and the record showed no passing on of the tax burden. In a reverse charge arrangement, no invoice is issued to a third party with a tax component, so the normal concept of onward passing of tax does not arise. The only material verification was whether Cenvat credit had been taken, and the record did not show any credit availment. On these facts, rejection of the refund claim on unjust enrichment was unsustainable and the refund was allowable.

---

---

Issues: Whether refund of Service Tax paid on reverse charge basis for transportation of oil cakes was liable to be rejected on the ground of unjust enrichment.

Analysis: The refund claim arose from Service Tax paid by mistake on freight under reverse charge for transport of oil cakes, for which exemption was available. The appellant produced a Chartered Accountant's certificate stating that the tax burden had not been passed on to any third party, and the materials showed that the amount had initially been written off and later reflected as receivable. The claim was not rejected for limitation, and no show cause notice had been issued specifically proposing rejection on unjust enrichment. In a reverse charge situation, no invoice is issued to a third party with a tax component, so passing on of the burden in the normal sense does not arise. The only relevant verification was whether Cenvat credit had been taken, and the record did not show any such availment, the appellant being a trader not entitled to Cenvat credit.

Conclusion: The rejection of the refund claim on unjust enrichment was unsustainable and the refund was held allowable in favour of the assessee.

---