Refund of unlawful service-tax deposits escapes statutory limitation, but unjust enrichment bars recovery by claimants who passed on incidence.

Amounts paid as service tax without charging authority before 1 July 2010 were characterised as deposits made under a mistake of law rather than tax or duty, so the one-year refund limitation under Section 11B did not apply. However, where the claimant recovered the amount from buyers or allottees and could not show that it bore the incidence, refund to that claimant was barred by unjust enrichment. Restitution may instead be sought by eligible buyers or allottees who actually bore the incidence, subject to verification, with necessary assistance from the claimant.

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Issues: (i) Whether refund of an amount deposited as service tax under a mistake of law could be rejected as time-barred under Section 11B; (ii) Whether the appellant was entitled to refund despite having collected the amount from buyers/allottees.

Issue (i): Whether refund of an amount deposited as service tax under a mistake of law could be rejected as time-barred under Section 11B.

Analysis: Service tax was not leviable on the relevant construction services before 01.07.2010. The amount deposited without any charging authority was a mere deposit made under mistake of law, and not duty or tax. The one-year limitation applicable to refund of duty or tax under Section 11B was therefore inapplicable.

Conclusion: The refund claim could not be rejected as barred by limitation. This issue was decided in favour of the assessee.

Issue (ii): Whether the appellant was entitled to refund despite having collected the amount from buyers/allottees.

Analysis: The appellant had admittedly recovered the amount from customers and did not establish that it had borne the tax incidence. Refund to the appellant would consequently be barred by unjust enrichment. Since the amount could not be retained without authority of law, eligible buyers/allottees were given liberty to seek refund upon verification, with the appellant required to provide necessary assistance.

Conclusion: The appellant was not entitled to refund because the incidence had been passed on to buyers/allottees. This issue was decided against the assessee.

Final Conclusion: The limitation objection to recovery of the unlawful deposit was unavailable, but restitution must be pursued by the persons who actually bore its incidence.

Ratio Decidendi: A payment made without statutory authority under a mistake of law is not subject to the limitation applicable to refund of duty or tax; however, refund cannot be granted to a claimant that has passed the incidence to others.

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