Refund limitation on pre-deposit starts after re-quantification of demand; litigation deposit treated as pre-deposit.

Where a demand is remanded for re-quantification, limitation for refund of excess pre-deposit is reckoned from the date the excess becomes ascertainable on completion of quantification. An amount paid during the pendency of litigation is treated as a pre-deposit, and the limitation applicable to ordinary refund claims under Section 11B does not defeat such a refund when the claim is filed shortly after the re-quantification order. On this reasoning, the refund was held not time-barred, the rejection order was set aside, and consequential refund relief was granted.

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Issues: Whether the refund claim arising after re-quantification of the demand pursuant to remand was barred by limitation, and whether the amount deposited during litigation was a pre-deposit not governed by the limitation period applicable to refund claims.

Analysis: The claim for refund arose only after the original authority re-quantified the demand for the normal period in terms of the Tribunal's earlier order. Until such re-quantification, it could not be ascertained whether any excess amount remained refundable. The amount paid during the pendency of the litigation was treated as a pre-deposit. On that basis, the claim filed shortly after the re-quantification order was held to be within time. The Board circular relied upon also supported the view that the limitation applicable to refund claims under Section 11B would not defeat a refund of pre-deposit made during litigation.

Conclusion: The refund claim was not barred by limitation, and the denial of refund was unsustainable. The assessee was entitled to refund of the excess amount with consequential relief.

Final Conclusion: The order rejecting refund was set aside and the appeal was allowed.

Ratio Decidendi: Where a demand is remanded for re-quantification, limitation for refund of excess pre-deposit is to be reckoned from the date on which the quantification determining the excess is completed, and pre-deposit made during litigation is not denied on the same footing as an ordinary refund claim.

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