Erroneous refund recovery requires statutory notice and demand; review powers alone cannot sustain reversal.

Recovery of an allegedly erroneous refund was held procedurally unsustainable where the department proceeded only under the review or revision machinery and did not issue a show cause notice under the statutory recovery provision. The Tribunal followed the settled line of authority that an erroneous refund must be recovered through the prescribed notice-and-demand process, not merely by revisiting the sanction under review powers. As no recovery notice had been issued under the proper provision, the attempted reversal of the refund could not stand.

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Issues: Whether recovery of an allegedly erroneous refund could be sustained without recourse to a show cause notice under the statutory provision governing recovery, when the department proceeded only under the review/revision provision.

Analysis: The refund had been sanctioned and partly paid, but the department sought to reverse that grant by invoking the review machinery. The Tribunal noted that the relevant line of authority held that recovery of an erroneous refund must be initiated under the provision corresponding to notice and demand for duty recovery, and not merely by taking recourse to the review provision. Since the proceedings were confined to the review route and no recovery notice under the recovery provision had been issued, the attempted recovery was procedurally unsustainable.

Conclusion: The recovery of the refund amount could not be sustained, and the assessee succeeded.

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