Pre-deposit refund and interest cannot be withheld after remand when appeal is set aside and refund entitlement is already settled.

A pre-deposit made under Section 35F is a deposit pending appeal, so once the appellate order was set aside and the matter was remanded for de novo adjudication, the Revenue had no basis to retain the amount. Refund followed from the setting aside of the order, and no separate refund claim was required where entitlement was already settled by law. Because the refund was claimed but withheld, interest was payable on the wrongfully retained sum from the date of the refund claim.

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Issues: (i) whether the amount pre-deposited under Section 35F could be retained by the Revenue after the appellate order was set aside and the matter was remanded for de novo adjudication; (ii) whether interest was payable on the amount wrongfully retained by the Revenue; and (iii) whether the assessee was required to file a separate refund claim before the Assistant Commissioner.

Issue (i): whether the amount pre-deposited under Section 35F could be retained by the Revenue after the appellate order was set aside and the matter was remanded for de novo adjudication.

Analysis: The pre-deposit was treated as a deposit pending appeal. Once the appellate order was set aside and the appeal was no longer pending, the basis for retention of the amount ceased. The remand did not confer any right on the Revenue to continue holding the deposit, and no separate direction for refund was necessary where the legal position was already settled.

Conclusion: The Revenue was not entitled to retain the pre-deposit, and refund was due to the assessee.

Issue (ii): whether interest was payable on the amount wrongfully retained by the Revenue.

Analysis: The refund request had been made and refused, resulting in wrongful retention of the deposited amount. In such circumstances, interest was directed to compensate for the period of unauthorized retention, applying the governing legal principle on interest for delayed refund of pre-deposit amounts.

Conclusion: Interest at 12% per annum was payable on the pre-deposited amount from the date of the refund claim.

Issue (iii): whether the assessee was required to file a separate refund claim before the Assistant Commissioner.

Analysis: Since the entitlement to refund flowed from the appellate order and the settled legal position on pre-deposit, a further refund application was unnecessary. The Tribunal directed immediate compliance and dispensed with any requirement of a fresh claim.

Conclusion: No separate refund claim was required.

Final Conclusion: The pre-deposit had to be returned forthwith with interest, and the departmental authority was bound to comply without insisting on any further refund application.

Ratio Decidendi: A pre-deposit made under Section 35F is a deposit pending appeal, and once the order under challenge is set aside and the matter is remanded, the Revenue cannot retain that amount; if refund is wrongfully withheld after claim, interest is payable on the retained sum.

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