Unjust enrichment does not bar service-tax refunds when providers prove the tax burden was not passed to recipients.

Service-tax refund is not barred by unjust enrichment where the contractual consideration is inclusive of tax and no separate tax amount is recoverable from the service recipient, because the service provider bears the tax incidence. The same principle applies where service tax is separately shown in invoices but the recipient has not paid that amount; supporting records and a chartered accountant's certificate may establish that the burden was not passed on. Refund of tax paid on non-taxable services is available where the claimant proves that it retained the tax burden.

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Issues: (i) Whether unjust enrichment applies where the contract price is inclusive of service tax; (ii) Whether unjust enrichment applies where service tax was separately invoiced but was not paid by the service recipient.

Issue (i): Whether unjust enrichment applies where the contract price is inclusive of service tax.

Analysis: Under the refund regime, a claimant must establish that the tax burden has not been passed on. Where the agreed contract value is inclusive of all taxes and no separate service-tax amount is recoverable from the recipient, any variation in tax liability does not alter the contracted consideration. The service provider consequently bears the tax incidence.

Conclusion: The bar of unjust enrichment does not apply; the assessee has borne the incidence of service tax and is entitled to refund.

Issue (ii): Whether unjust enrichment applies where service tax was separately invoiced but was not paid by the service recipient.

Analysis: The chartered accountant's certificate and the records established that, although service tax was shown separately in invoices, the service recipient did not remit that amount. The tax was therefore borne by the service provider rather than passed on to the recipient.

Conclusion: The bar of unjust enrichment does not apply; the assessee has borne the incidence of service tax and is entitled to refund.

Final Conclusion: Refund of service tax paid on the non-taxable services is legally available because the tax incidence was not passed to the service recipients.

Ratio Decidendi: A service-tax refund is not defeated by unjust enrichment where the contractual price is tax-inclusive, or where separately invoiced tax has not been recovered from the recipient, provided the claimant establishes that it bore the tax incidence.

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