Erroneous refund recovery must follow statutory procedure and limitation rules before any demand can be sustained.

Recovery of an erroneous refund must follow the prescribed statutory route: the earlier refund order must first be effectively challenged, and proceedings under section 11D are not a substitute for action under section 11A read with section 35E(2). In the absence of suppression or misstatement, the normal limitation period applies to recovery proceedings, so a notice issued several years after the refund or re-credit is time-barred. The Tribunal therefore treated the recovery action as unsustainable and the delayed notice as barred by limitation.

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Issues: (i) Whether recovery of the amount re-credited pursuant to the Superintendent's refund direction could be sustained without first setting aside that refund order and whether proceedings under section 11D were maintainable; (ii) Whether the show cause notice issued in 1997 for recovery of the amount granted in 1993 was barred by limitation.

Issue (i): Whether recovery of the amount re-credited pursuant to the Superintendent's refund direction could be sustained without first setting aside that refund order and whether proceedings under section 11D were maintainable.

Analysis: The amount had been re-credited in the appellants' records pursuant to the Superintendent's assessment of RT-12 returns. Recovery was later attempted by issuing a notice under section 11D, alleging that the amount had been realised from customers. The earlier refund direction had not been challenged under section 35E(2). The Tribunal held that recovery of an erroneous refund requires initiation of proceedings under section 11A and, where necessary, challenge to the refund order under section 35E(2). Without setting aside the earlier refund order, a notice under section 11A alone could not validly sustain recovery, and section 11D was not the proper provision for such recovery.

Conclusion: The recovery proceedings were invalid and unsustainable.

Issue (ii): Whether the show cause notice issued in 1997 for recovery of the amount granted in 1993 was barred by limitation.

Analysis: The notice was issued several years after the refund/re-credit, and the record did not disclose suppression or misstatement by the appellants. In the absence of such ingredients, the normal limitation period governed the recovery action, and the delayed notice could not be sustained.

Conclusion: The notice was barred by limitation.

Final Conclusion: The impugned order was set aside and the appellants' challenge succeeded, with consequential relief.

Ratio Decidendi: Recovery of an erroneous refund must be pursued through the prescribed statutory machinery within limitation, and cannot be sustained merely by invoking section 11D without first taking effective action against the refund order and without establishing grounds for extended limitation.

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