2022 (7) TMI 1465 - HC - GST

Excess CGST Recovery Beyond 10% Pre-deposit Must Be Refunded With Interest Under Finance Act Provisions

M/s. Munjoh Resorts Private Limited & Anr. Versus Commissioner of Central Tax, Haldia CGST & Central Excise Commissionerate, & Ors.

The HC disposed of a writ petition challenging CGST Authority's inaction on a refund claim. Petitioners argued they were entitled to refund of amounts ... Refund of the excess amount beyond 10 % of the demand arising out of the original order - HELD THAT:- The facts remain that the respondent authority concerned has recovered the amount of demand from the petitioners more than 10% of the demand which finally arises from the order of the Commissioner after reduction, which action is not legally sustainable in view of the Finance Act, 1994 read with Section 35F of the Central Excises and Salt Act, 1944 read with Circular No. 1053/2/2017-CX, dated 10.3.2017 F.No.96/1/2017-CX.I dated 10th March, 2017 issued by the Central Board of Excise & Customs, New Delhi. Petition disposed of by directing the respondents Authority concerned to refund the money to the petitioner in excess of 10% of the aforesaid demand arising after merger with the order of Commissioner of Appeals, within four weeks from date with statutory interest. Issues:Petitioners' claim of refund inaction by CGST Authority, entitlement to refund, legality of recovery beyond 10% of demand, applicability of relevant statutory provisions and High Court decisions.Analysis:The petitioners filed a writ petition challenging the inaction of the respondents, Commissioner of Central Tax, Haldia, CGST, in considering their refund claim. The petitioners contended that they are entitled to a refund as they have already filed an appeal before the Appellate Authority by making a mandatory pre-deposit of 10% of the demand arising from the original adjudication order. The petitioners argued that any recovery beyond this 10% pre-deposit is not legally sustainable under the relevant statutory provisions of the CGST Act. They also relied on three decisions from different High Courts to support their contention.The learned Advocate for the respondents, CGST Authority, opposed the writ petition, arguing that for a refund of the excess amount beyond 10% of the demand, the petitioners should approach the Tribunal where the appeal is pending. The respondents contended that the decisions cited by the petitioners are distinguishable and not applicable to the present case. It was mentioned that the Commissioner had reduced the demand arising from the original order, but the respondent authority had still recovered an amount exceeding 10% of the reduced demand, which was deemed legally unsustainable under the Finance Act, 1994, read with Section 35F of the Central Excises and Salt Act, 1944, and Circular No. 1053/2/2017-CX.After considering the submissions of both parties, the High Court disposed of the writ petition by directing the respondents to refund the excess amount recovered from the petitioners beyond 10% of the demand arising after the merger with the order of the Commissioner of Appeals. The respondents were instructed to refund the money within four weeks from the date of the order, along with statutory interest.