2026-VIL-864-MAD-ST
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SERVICE TAX High Court Cases

Service Tax - Refund of wrongly collected tax – Payment of service tax under mistake of law - Service receiver's eligibility to claim refund when service provider did not challenge assessment – Assessee-Respondent provided crude oil extraction services under production sharing contract with ONGC and entered agreement with service provider for supply and operation of floating rigs - Service provider charged service tax under Mining Services and remitted to Department - Respondent sought refund claiming service tax for floating rigs taxable only from 16.05.2008 under Supply of Tangible Goods Service category - Original Authority rejected on ground service provider did not raise classification dispute - Whether service receiver is eligible to claim refund of service tax collected wrongly when service provider did not challenge assessment - HELD - Creation of new entry for Supply of Tangible Goods Service and conclusive finding of Supreme Court in Indian National Shipowners Association lead to irresistible conclusion that respondent as service recipient eligible for refund of service tax paid erroneously under Mining Service classification. The payment of tax due to mistake of law and misclassification can never carry character of lawful levy to satisfy mandate of Article 265 of Constitution - Limitation prescribed under Section 11B of Central Excise Act not applicable for refund claims for service tax paid under mistake of law. The tax collected by mistake and retained by Department constitutes unjust enrichment and violates Article 265 - Concurrent findings by Appellate Authority and Tribunal that service tax was passed on to respondent and burden of unjust enrichment discharged not subject to interference – The service recipient is entitled to claim refund without relying on civil suit or writ petition when factual findings made in favour of assessee and no dispute regarding classification and passing of tax - Authorities below rightly exercised jurisdiction to grant relief as retention of tax against spirit of Constitution - The refund order is upheld and Civil Miscellaneous Appeal dismissed
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