2025 (12) TMI 556 - SCH - Central Excise

Higher court sends revenue refund appeal back for fresh hearing on substantial legal questions, urges speedy decision

SC disposed of the revenue's petition challenging rejection of refund without issuance of SCN by holding that the HC had erred in not framing and ... Seeking to challenge the orders passed by the Commissioner of Central Excise (Appeals) Kolkata - rejection of refund without issuance of Show Cause Notice - HELD THAT:- The correct course that the High Court should have followed was to look into the substantial questions of law, convince itself, frame the same and thereafter could have passed the impugned order. Be that as it may, the High Court shall take up the appeal filed by the revenue and look into the substantial questions of law as suggested by the Revenue - If the High Court finds any merit and admits the appeal and grants relief it shall be open for the petitioner to take future course of action in accordance with law. If the High Court does not find any merit in the suggested substantial questions of law and dismisses the appeal, the entire issue would come to an end. It is informed that the High Court has already kept the matter for 17.11.2025, the High Court is requested that all possible endeavours be made to see that the parties are heard on 17.11.2025. This petition stands disposed of. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in an appeal under Section 35-G of the Central Excise Act, 1944, the High Court can stay the operation of an order of the Appellate Tribunal without first examining and formulating substantial questions of law. 1.2 What directions are appropriate for the High Court in dealing with the pending appeal under Section 35-G, including expeditious consideration of substantial questions of law and consequential reliefs. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Power of the High Court to grant interim stay without formulating substantial questions of law in a Section 35-G appeal Interpretation and reasoning 2.1 The Tribunal had directed payment of interest on refund sanctioned to the assessee, and the revenue challenged this order before the High Court under Section 35-G of the Central Excise Act, 1944, proposing certain substantial questions of law in the memorandum of appeal. 2.2 A preliminary objection was raised before the High Court that, in the absence of admission of the appeal on any formulated substantial question of law, the High Court could not have passed the impugned order staying the operation, implementation and execution of the Tribunal's directions regarding refund. 2.3 The Court accepted this contention to an extent, holding that the correct course for the High Court, before passing such an interim order, was first to examine the suggested substantial questions of law, satisfy itself, and frame such substantial questions of law if they arose, and only thereafter pass an order on interim relief. Conclusions 2.4 The High Court ought not to have stayed the Tribunal's directions regarding refund without first looking into and formulating substantial questions of law; the proper sequence requires examination and framing of substantial questions of law prior to grant of such interim orders. Issue 2: Directions to the High Court regarding consideration of the Section 35-G appeal and expeditious disposal Interpretation and reasoning 2.5 The Court directed that the High Court should now take up the appeal filed by the revenue, examine the substantial questions of law suggested in the memorandum of appeal, and then decide whether to admit or dismiss the appeal. 2.6 If the High Court finds merit and admits the appeal and grants relief to the revenue, it will be open to the assessee to adopt appropriate future courses of action in accordance with law; conversely, if the High Court finds no merit in the suggested substantial questions of law and dismisses the appeal, the controversy will stand concluded. 2.7 Considering that a date had already been fixed by the High Court, the Court requested that all possible endeavours be made to hear the parties on the scheduled date and to pass appropriate orders within a period of one month. Conclusions 2.8 The High Court is directed to: (i) examine and decide on the existence of substantial questions of law suggested by the revenue; (ii) admit or dismiss the appeal accordingly; and (iii) endeavour to hear the parties and pass appropriate orders within one month, preferably on the date already fixed. 2.9 The petition before the Court, along with all pending applications, stands disposed of in view of these directions, leaving the merits of the revenue's appeal to be determined by the High Court.