2025 (8) TMI 1399 - AT - Service Tax

Refund claim for unutilized CENVAT credit improperly returned; limitation defense rejected, matter remanded for merits hearing

M/s Fidelity Information Services India Pvt. Ltd. Versus Commissioner of Central Excise, Goods And Service Tax, Chandigarh-I

M/s Fidelity Information Services India Pvt. Ltd. Versus Commissioner of Central Excise, Goods And Service Tax, Chandigarh-I - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether refund applications for unutilized CENVAT credit that were returned by the Department for want of documents amount to a valid return such that the original filing date is displaced for computation of limitation under Section 11B of the Central Excise Act, 1944 and Rule 5 of the CENVAT Credit Rules, 2004. 2. Whether an appeal before the Commissioner (Appeals) is barred by limitation where the Order-in-Original rejecting the refund was not supplied to the taxpayer and the taxpayer only received the order in response to an RTI application - i.e., what event triggers the limitation period for filing an appeal. 3. Whether the adjudicating authorities may reject refund claims solely on the ground of limitation without deciding the claims on merits, and whether remand for adjudication on merits is required where limitation was the sole basis of rejection and procedural defects (return of application / non-supply of order) are alleged. 4. Ancillary: whether claim of transitional CENVAT credit under GST may be pursued concurrently with refund claims under the pre-GST regime (noted but not decided on merits here as appellant intends to not press appeals if pre-GST appeals are decided on merits). ISSUE-WISE DETAILED ANALYSIS Issue 1: Effect of Departmental 'return' of refund application for deficiency - does initial filing date govern limitation? Legal framework: Refund of unutilized CENVAT credit is governed by Rule 5, CENVAT Credit Rules, 2004 read with Section 11B, Central Excise Act, 1944. Procedural safeguards require deficiency notices/communication rather than returning applications in a manner that defeats statutory filing dates. Precedent Treatment: The appellant relied on High Court and Tribunal decisions (e.g., United Phosphorus Ltd. (Guj.), Shasun Pharmas Ltd. (Madras), Balmer Lawrie (CESTAT Kolkata), Chennai Petroleum (CESTAT Chennai), CCE Pune-1 v. Motherson Sumi (CESTAT Mumbai)) holding that refund applications cannot be returned on account of documentary deficiency and that initial filing date should govern time computation. Interpretation and reasoning: The Court found that the refund applications were filed within time (29.01.2010) and that the Department, instead of issuing a deficiency memo within the prescribed period, 'returned' the applications - an act held impermissible under law. The Court treated the later resubmission (23.01.2019) as a re-submission for re-verification rather than a fresh filing that would reset limitation. The adjudicating authority's view that the 2019 filing was a fresh filing barred by limitation was rejected because the original timely submission remained effective and the Department had not validly converted it into an invalid filing by returning it. Ratio vs. Obiter: Ratio - a departmental return of a timely-filed refund application for want of documents, when the law requires deficiency communication, cannot operate to displace the original filing date for limitation under Section 11B/Rule 5; initial filing date governs. Obiter - references to particular precedents are applied and followed, not overruled. Conclusions: The Court concluded that the original filing date (29.01.2010) governs limitation and that returning the applications was impermissible; therefore the rejection premised on the 2019 filing being time-barred was not sustainable. Issue 2: Trigger for limitation to file appeal - supply of Order-in-Original vs. date of order Legal framework: Statutory limitation for filing appeal to Commissioner (Appeals) runs from receipt/supply of the Order-in-Original. Principles of natural justice and service of orders govern computation of appeal period. Precedent Treatment: The appellant relied upon authorities that compute limitation from the date of initial filing or from actual receipt/supply of the impugned order; the Court cited these principles and treated them as applicable. Interpretation and reasoning: The Court accepted appellant's uncontested position that the Order-in-Original rejecting the refund was not supplied to the appellant contemporaneously and that a copy was only obtained pursuant to an RTI application (filed 11.02.2022, supplied 28.03.2022). The Department failed to establish on record that the Order-in-Original had been supplied earlier. Consequently, the Court held that the date of supply (28.03.2022) fixes the commencement of the period of limitation for filing the appeal. Appeals filed on 23.05.2022 were therefore within time. Ratio vs. Obiter: Ratio - where a departmental order rejecting refund is not proved to have been supplied to the taxpayer, the limitation for filing appeal begins on actual supply of the order; failure of Department to prove service defeats time-bar objection. Obiter - discussion of RTI-based procurement of orders as a common fact pattern. Conclusions: The Court concluded that the appeals filed on 23.05.2022 were within the statutory period because the Order-in-Original was supplied on 28.03.2022 and the Department could not prove earlier service. Issue 3: Whether rejection on limitation alone requires remand for decision on merits Legal framework: Administrative adjudication demands decision on merits where claims are otherwise tenable; principles of natural justice require opportunity of hearing before denial on substantive grounds. Precedent Treatment: The Court relied upon the proposition (as reflected in cited authorities) that where a claim is dismissed on procedural/limitation grounds without adjudication on merits, remand may be required to enable determination on merits, particularly when procedural irregularities by the Department are alleged. Interpretation and reasoning: Both the original authority and Commissioner (Appeals) rejected the refund solely on the ground of limitation. Given the Court's findings that (a) the initial filings were within time and (b) the Order-in-Original was not proved to have been supplied, the Court held that the authorities below had not examined the refund claims on merits. The Court therefore exercised remedial direction: set aside the impugned order(s) insofar as they dismissed the appeals on limitation and remanded the matters for fresh adjudication on merits after following principles of natural justice and affording opportunity of hearing. Ratio vs. Obiter: Ratio - where limitation rejection is founded on procedural irregularity attributable to the Department and the merits were not considered, the proper course is remand to decide refund claims on merits after affording opportunity of hearing. Obiter - remarks on interplay with subsequent transitional credit proceedings are non-decisive in this order. Conclusions: The Court set aside the impugned order rejecting the appeals on limitation and remanded all six refund applications to the original authority for decision on merits within three months after receipt of certified copy of the order, directing adherence to natural justice. Issue 4 (Ancillary): Concurrent claims of transitional credit under GST and pre-GST refund claims Legal framework & Treatment: The record discloses that transitional credit (TRAN-1) matters were separately adjudicated and appeals under GST were pending; the Department questioned double benefit. The Court did not adjudicate this substantive conflict because appellant indicated he would not press the GST appeals if pre-GST appeals were decided on merits. Interpretation and reasoning: The point was noted but not decided. The Court's order leaves open the adjudication of transitional credit by the competent authority on merits, without expressing a view on entitlement or prohibition of concurrent benefits. Ratio vs. Obiter: Obiter - any observation about interaction between refund and transitional credit claims is not part of the operative ratio. Conclusions: The Court did not decide the transitional credit issue and remanded refund claims for merits; appellant may not press GST appeals if favorable decision is rendered on pre-GST claims. Operative Conclusion The Court held that (a) departmental return of timely-filed refund applications was impermissible and the initial filing date governs limitation; (b) limitation for filing appeal runs from actual supply of the Order-in-Original (which the Department failed to prove); (c) because authorities rejected claims solely on limitation without deciding merits, the impugned orders are set aside and all six matters are remanded to the original authority to decide the refund claims on merits after affording opportunity of hearing within three months.