2026-VIL-1234-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax – Refund of service tax paid erroneously on supplying RMC and cement slurry - Applicability of Doctrine of Unjust Enrichment when Service Tax is Initially Collected and Subsequently Refunded through Credit Notes - Whether the doctrine of unjust enrichment applies to prevent refund of service tax when the assessee has initially charged the tax from the customer and subsequently issued credit notes reversing the charge – HELD - The supply of RMC is a pure sale contract and does not involve any provision of service and accordingly the appellant was not liable to pay service tax. Since service tax was not payable, the amount paid was an erroneous payment and refund thereof is admissible – The Supreme Court in CCE Vs. Addison & Co. Ltd. held that when the assessee returns the excess duty amount to its buyers evidenced by credit notes and a Chartered Accountant's certificate, it is presumed that the incidence of duty has been borne by the assessee and such incidence has not been passed on, thereby rebutting the presumption of unjust enrichment. When the appellant returned the duty recovered from customers back to the customers by way of credit notes immediately after filing the refund claim, the presumption is rebutted. The appellant had subsequently transferred the amount by RTGS to the customer with supporting certificates from the customer and Chartered Accountant confirming receipt and payment - The presumption of unjust enrichment is rebutted and the appellant is held eligible for refund of the erroneously collected service tax – The appeals are allowed - Interest on refund of erroneously collected Service Tax, Applicability of Limitation Period under Section 11B – The appellant filed a refund claim for interest paid on the erroneously collected service tax, which was rejected on the ground that the refund was barred by limitation under Section 11B of the Central Excise Act - Whether the limitation period under Section 11B applies to refund of interest paid on erroneously collected amounts that do not constitute lawfully payable duty, and whether interest is refundable when the principal amount is determined to be erroneously collected – HELD - When an amount is collected by the Revenue without authority of law, it must be refunded with interest. The tribunal held that any amount paid under mistaken notion of law remains only a deposit and not duty, and provisions of Section 11B are not attracted to such deposits. The interest is a corollary to such erroneous payment and should be treated as a deposit like the principal amount, and the Revenue cannot retain such deposits unlawfully - Since amounts paid erroneously do not acquire the character of duty, the provisions of Section 11B which refer only to refund of duty are not applicable, and therefore the limitation of one year does not apply – The refund of interest paid on the erroneously collected service tax is allowed without any limitation period applying.
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