Refund of wrongly collected service tax allowed where no levy existed and unjust enrichment did not apply.

Service tax collected on leased circuits during a period when no service tax was leviable was treated as an erroneous collection under an inapplicable levy, so the refund claim remained maintainable. The doctrine of unjust enrichment did not bar refund of amounts paid under a levy that was not in force, and Section 11D of the Central Excise Act was held inapplicable to the service tax facts. The rejection of refund was therefore incorrect, and refund to the assessee was directed.

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Issues: Whether service tax collected on leased circuits during a period when no service tax was leviable was refundable to the assessee and whether the doctrine of unjust enrichment or Section 11D of the Central Excise Act applied to bar such refund.

Analysis: The amount collected by the DOT was not a valid levy of service tax, but an erroneous collection for a period when service tax was not in force. Amounts paid under an inapplicable levy do not attract the ordinary refund restrictions applicable to service tax, including unjust enrichment. Section 11D of the Central Excise Act was held to have no application to service tax in the circumstances of the case.

Conclusion: The refund claim was maintainable and the rejection of refund was incorrect; the amount collected as service tax was directed to be refunded to the assessee.

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