Tribunal directs refund of unadjusted deposit with interest under Section 11BB

The Tribunal allowed the appeal, directing the Adjudicating Authority to refund Rs.2,00,000/- with interest under Section 11BB. The Tribunal found that the unadjusted deposit was acknowledged in the audit report and remained unused, qualifying for a refund as it was considered a revenue deposit not subject to limitations under the Act.

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Issues:
Whether the refund of Rs.2,00,000/- has been rightly rejected.

Analysis:
The appellant, engaged in Works Contract Service, transitioned to the GST regime from Service Tax. An audit revealed non-payment of service tax on taxable services provided to MES, resulting in a calculated tax liability of Rs.10,61,694/-. The appellant deposited Rs.2,00,000/- before adjudication, which was not credited. Subsequently, under the SVLDR Scheme, the appellant sought settlement, mentioning the pre-deposit. However, Revenue estimated the payable amount without recognizing the pre-deposit. Despite objections and representations, the Designated Authority refused to adjust the pre-deposit, leading the appellant to pay the demanded amount under protest and receive a settlement certificate. The appellant then applied for a refund of the unadjusted deposit, which was rejected citing lack of evidence that the amount was not utilized for other tax liabilities. The rejection was upheld by the Commissioner (Appeals), prompting the appellant's appeal to the Tribunal.

The appellant argued that the unadjusted deposit of Rs.2,00,000/- was recognized in the audit report and not adjusted during adjudication or under the SVLDR Scheme. The appellant emphasized that the amount remained as a revenue deposit without utilization. The Revenue, represented by the Authorised Representative, relied on the rejection order.

After considering the contentions, the Tribunal noted that the appellant's deposit of Rs.2,00,000/- was acknowledged in the audit report and remained unadjusted through subsequent proceedings. As the amount was a revenue deposit not utilized for any purpose, the Tribunal found no limitation under Section 11B of the Act for refund. Consequently, the Tribunal set aside the rejection order and directed the Adjudicating Authority to refund Rs.2,00,000/- with interest under Section 11BB.

In conclusion, the Tribunal allowed the appeal, emphasizing the appellant's right to a refund of the unadjusted deposit, which was considered a revenue deposit and not subject to limitations under the Act.

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