Problem

Any made purchase will still be recorded even when a user makes a refund, and actually gets the refund. The same is true when you (the developer/app owner) issue a refund/revoke request for the in-app product.

The only difference will be the purchase's "purchaseState". The problem here with Google's Billing Library is that they mask this "purchaseState" value in the purchase.getPurchaseState() call to either PENDNG or PURCHASED state. See in the decompiled code:

public int getPurchaseState() {
    switch(this.zzc.optInt("purchaseState", 1)) {
    case 4:
        return 2; // PENDING
    default:
        return 1; // PURCHASED
    }
}

When you have an in-app product with a refunded state, its state is rather UNSPECIFIED_STATE, which is masked to PURCHASED as in the code above.

Simple Solution

To get over this, simply just ignore the library's purchase.getPurchaseState() method, and instead use your own unmasked custom:

int getUnmaskedPurchaseState(Purchase purchase) {
    int purchaseState = purchase.getPurchaseState();
    try {
        purchaseState = new JSONObject(purchase.getOriginalJson()).optInt("purchaseState", 0);
    } catch (JSONException e) {
        e.printStackTrace();
    }

    return purchaseState;
}

Hard Solution

It seems Google has just done that masked to push you to do this solution. Use the Voided Purchases API to provide a list of orders that are associated with purchases that a user has voided. According to their documentation...

A purchase can be voided in the following ways:

• The user requests a refund for their order. The user cancels their order.
• An order is charged back.
• Developer cancels or refunds order. Note: only revoked orders will be shown in the Voided Purchases API.
• If developer refunds without setting the revoke option, orders will not show up in the API.
• Google cancels or refunds order.

However, this solution is not currently available as a Java android library, and you will have instead to make your server requests, and to use Google Play Developer APIs.