Indirect tax refund claims remain subject to limitation and unjust enrichment, even when payment is said to arise from mistake of law.

Refund of service tax paid on construction of complex service was denied because the claimant did not establish entitlement on the merits of the alleged mistaken classification, and the refund had to satisfy the statutory conditions in any event. The Tribunal held that a claim said to arise from mistake of law still remains subject to the refund limitation regime and the bar of unjust enrichment. As the appellant failed to show that the tax incidence had not been passed on to customers, the refund requirements were not met and rejection of the claim was upheld.

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Issues: (i) Whether the service tax paid on construction of complex service for the disputed period was refundable on the footing that the activity was exempt or otherwise not taxable as claimed. (ii) Whether the refund claim was barred by limitation and hit by unjust enrichment under the statutory refund framework.

Issue (i): Whether the service tax paid on construction of complex service for the disputed period was refundable on the footing that the activity was exempt or otherwise not taxable as claimed.

Analysis: The disputed activity related to a composite construction arrangement during a period when works contract service had already been introduced. The claim that the tax was paid under a mistaken classification did not by itself establish entitlement to refund. The Tribunal proceeded on the basis that the payment was made under the construction of complex category and that the statutory refund conditions had to be satisfied before any refund could be granted.

Conclusion: The refund was not allowable on the merits urged by the appellant.

Issue (ii): Whether the refund claim was barred by limitation and hit by unjust enrichment under the statutory refund framework.

Analysis: Refund of indirect tax is governed by the statutory scheme, and a claim based on mistake of law does not escape the requirement of Section 11B. The Tribunal applied the principle that refund claims must satisfy limitation and must also overcome the bar of unjust enrichment. As the appellant did not establish that the incidence of tax was not passed on to the customers, the statutory preconditions for refund were not met.

Conclusion: The refund claim was barred by limitation and unjust enrichment and was correctly rejected.

Final Conclusion: The rejection of the refund claim was upheld and the appeal failed.

Ratio Decidendi: Refund of indirect tax, including a claim said to arise from mistake of law, remains subject to the statutory limitation and unjust enrichment requirements of the refund provision, and the burden lies on the claimant to prove that the tax incidence was not passed on.

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