Duplicate service-tax payments qualify for refund where tax incidence was neither credited nor passed on, with statutory interest.
Duplicate service-tax payments unsupported by a fresh taxable liability are refundable where payment records, reconciliation, accounts, audited statements and an auditor's certificate establish prior discharge of the liability. Refund requires proof that the amount was neither availed nor utilised as CENVAT credit nor passed on, thereby rebutting unjust enrichment. Errors in ST-3 reporting, accounting heads or service classification do not make the duplicate amount legally due. Statutory interest is payable on an admissible refund not sanctioned within the prescribed period through the application of section 11BB to service tax.
Issues: (i) Whether a duplicate service-tax payment, already discharged for the same liability and neither taken as CENVAT credit nor passed on, is refundable under Section 11B of the Central Excise Act, 1944; (ii) Whether consequential interest is payable on the admissible refund under Section 11BB of the Central Excise Act, 1944.
Issue (i): Whether a duplicate service-tax payment, already discharged for the same liability and neither taken as CENVAT credit nor passed on, is refundable under Section 11B of the Central Excise Act, 1944.
Analysis: Section 11B permits refund of tax not legally due, subject to the claimant establishing that the incidence has not been passed on. The treasury challans, reconciliation, accounting records, audited financial statements and auditor's certificate established that the original liability had been discharged and that the subsequent payment was a duplicate payment unsupported by any fresh taxable liability. The duplicate amount was neither availed nor utilised as CENVAT credit and was continuously reflected as receivable from the Department. Non-reporting of the original payment in the ST-3 return, or an error in accounting head or service category, could not negate an actual payment or convert a duplicate payment into tax legally due. The evidence also rebutted unjust enrichment.
Conclusion: The duplicate service-tax payment is refundable under Section 11B of the Central Excise Act, 1944, in favour of the assessee.
Issue (ii): Whether consequential interest is payable on the admissible refund under Section 11BB of the Central Excise Act, 1944.
Analysis: Section 11BB of the Central Excise Act, 1944, as applied to service tax through Section 83 of the Finance Act, 1994, mandates statutory interest where an admissible refund is not sanctioned within the prescribed period.
Conclusion: Consequential interest on the admissible refund is payable under Section 11BB of the Central Excise Act, 1944, in favour of the assessee.
Final Conclusion: A duplicate indirect-tax payment, proved through primary payment and accounting records and shown not to have been credited or passed on, must be refunded with statutory interest notwithstanding return-reporting or accounting-category errors.
Ratio Decidendi: Documentary proof of a duplicate indirect-tax payment, coupled with proof that its incidence was neither availed as credit nor passed on, satisfies the refund and unjust-enrichment requirements; procedural reporting errors do not render the duplicate amount legally due.