Should I send the difference back or punish this little scammer for what he did?
Yes you should. Because you are not a scammer like him. After deducting the amount he scammed you, the rest are his money not yours. So, from moral point of view I will suggest you to send the money back to his wallet and move on. His account is already tagged so at least from this account he can not do any trade.
I see, right now I'm 100% sure the money he sent me he scammed from someone else so I have decided to donate those money to an animal shelter (I love cats). If I send the coins back to him he will keep on doing what he does best, scam people out of their hard earned money.