Service Tax Paid under Mistake of Law: CESTAT Allows Refund with 12% Interest

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has allowed a service tax refund along with a 12% interest payment to an assessee who had paid the tax under a clear legal mistake. The tribunal's decision aims to prevent unjust enrichment of the revenue authorities at the expense of the taxpayer. It clarified that payments made due to a genuine misunderstanding of the law do not automatically grant the revenue department a perpetual right to retain those funds, emphasizing the principle of fairness in tax matters.