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2024 (9) TMI 129
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....8 and post the rendering of our judgment in the original round of litigation which ensued inter partes and was represented by W.P.(C) 7853/2017. We find that the entitlement of the petitioner to a refund had directly arisen for consideration before this Court in the aforenoted writ petition and the judgment rendered thereon since reported as Telecare Network (India) Pvt. Ltd. vs. Union of India 2018:DHC:4916-DB [and which we shall for the sake of convenience refer to hereinafter as "Telecare I"]. 2. The Court had in Telecare I taken note of the relevant facts pertaining to the 103 Bills of Entries in question and which pertained to the import of mobile phones in India. It also took note of the stand of the writ petitioner that the self-assessed duty which was to be deposited on the ICEGATE portal provided no option to the petitioner to avail of exemptions under the notifications which applied. It was in the aforesaid backdrop that it is stated to have paid the Countervailing Duty [CVD] leviable under Sections 3 (1) and 3 (5) of the Customs Tariff Act, 1975 [1975 Act] at the rate of 12.5% as against the 1% which was payable. 3. The petitioner appears to have asserted that it w....
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.... w.e.f, 17.07.2016 so that from that date onwards the ratio of the SRF judgment would not automatically apply. Therefore, the system has to be modified to allow re-assessment of Bs/E filed upto 16,07.2015 with the benefit of said Notification. 4. Therefore, it is requested that aforesaid Si. No. of the Notification may be provided for in the system urgently so that re-assessment as per orders of the Commissioner of Customs (Appeals) may be done and resentment amongst affected importers may be addressed. Encl: As above Yours faithfully, sd/ (Vivek Johri) Principal Commissioner of Customs, (Imports) New Custom House, New Delhi 20.10.2016 xxxx xxxx xxxx Government of India, Ministry of Finance, Directorate of Systems and Data Management 4th & 5th Floor, Hotel Samrat, Chanakyapuri, New Delhi Dated 04.11.2016 File No. IV (35) 47/2013-Systems To Principal Commissioner of Customs (Import) Air Cargo Complex, New Customs House, New Delhi. Sir, Subject: Providing for Si. No. 263A of Notification No. 12/2012-CE dated 17.03.2012 (as amended)-r....
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.... the case of import, it has to be imagined/presumed that the article imported had been manufactured or produced in India to examine what amount of excise duty was leviable. The condition of availing CENVAT was held to be irrelevant and furthermore, the presumption that such goods were manufactured in India and excise duty leviable on it had to be drawn and then an ascertainment would be essential to determine the extent of CVD to which the importer would be entitled and the refund application were to be processed on the basis of the said principle. The demand of the CVD raised in the said cases was thus set aside. 7. It is stated that after the declaration of the law in SRF Limited (supra), in particular, the respondents have been giving the benefit of concessional rate of duty to others till the statutory amendment took place in Notification No. 12/2012 as held in order dated 28.01.2016 passed in C/51815 to 51874 and 51878 to 51899/2016 by CESTAT. The Petitioner complains that it has thus been subjected to discrimination. The petitioner states that since it merely imported the mobile phones and not manufactured them, it could not possibly have taken credit in respect of t....
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.... under the Act. Its inaction in filing the refund application within the prescribed period of limitation as per Section 27 cannot be overlooked or even rectified since the said mistake needs to be corrected by filing within the period of one year from the date of payment only. The delay in filing of application for refund beyond the prescribed period of one year cannot be condoned by any adjudicating authority, appellate authority or Tribunal." 8. While dealing with the aforesaid contention, the Court ultimately held as follows:- "12. There is no dispute about the applicability of SRF Ltd (supra); indeed, the Revenue's refrain during the hearing was that the amounts could not be refunded because the claims were time-barred and that the petitioner has an alternative remedy. This Court is of opinion that the plea of alternative remedy-an unoriginal and frequently used stereotypical defence by public bodies in such cases at least dodges the crux of any dispute, i.e the liability of the concerned public body or agency on merits. Sans any dispute with respect to facts, this Court finds it entirely unpersuasive, since Article 144 of the Constitution, compels all authoriti....
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.... of S.No. 263 A of the Notification No. 12/2012-CE dated 17.03.2012, as amended, read with condition no. 16 of the said Notification, on import of mobile phones against 103 Bills of Entry filed during 26.03.2015 to 22.06.2015. Whereas, it paid the said CVD @ 12.5% due to nonawareness of the law. However as soon as they got to know it, they filed the refund for the amount paid in excess of 1%. 8. The Hon'ble High Court in its order dated 06.08.2018 has also observed that SRF Limited (supra) had ruled in principle that import implied a deemed manufacture, without any corresponding obligation on the part of the importer to have availed CENVAT credit. As such, the amount claimed was not duty and could not have been recovered by the Customs authorities in the first instance, given the declaration of law in SRF Limited (supra). 8a. In other words, the Hon'ble High Court has observed that the amount deposited in excess of 1% CVD (amount claimed as refund i.e. Rs. 13,16,64,468/-) does not amount to DUTY and the relevant sections of the Act applicable to deposit and refund of duty cannot be applied to this amount deposited in excess. 8b. Accordingly, as pe....
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....as statutorily stipulated. 14. It was additionally argued that the interest which is spoken of in Section 27A is liable to be paid on "duty" that may have been deposited. According to Ms. Bhatnagar, the Court in Telecare I having held that the amount claimed was not duty, Section 27A consequently would not apply. 15. In our considered opinion, the stand as taken is not only misconceived, it is also wholly unjust and patently arbitrary. We may at the outset note that the observation which is alluded to appears in paragraph 12 of the original judgment and where the Court had observed that since the amount which has been claimed by the writ petitioner was not "duty", it could have never been recovered by the Customs authorities in the first instance. 16. In our considered opinion, the observation of the amount claimed not being duty is clearly being misinterpreted and construed dehors the context in which it appears. All that the Court intended to convey was that the amount which the petitioner had mistakenly deposited, could never have been recovered or retained by the Customs authorities. This is in light of the legal position which stood duly enunciated by the Supreme Cour....
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....ection 27 of the Customs Act, 1962 and subject to claimant establishing that burden of duty has not been passed on to a third party. In such circumstances, it was held, no civil suit for refund of duty is maintainable. It also observes that writ jurisdiction of High Courts under article 226 and of the Supreme Court under article 32 remains unaffected by the provisions of section 11B of the Act. It was further held that concerned court while exercising the jurisdiction under the said articles, will have due regard to the legislative intent manifested by the provisions of the Act and the writ petition would naturally be considered and disposed of in the light of the provisions of section 11B of the Act. It has been held therein that power under article 226 has to be exercised to effectuate the regime of law and not for abrogating it, as the power under article 226 is conceived to serve the ends of law and not to transgress them. At paragraph 113 of the said judgment, they classify the various refund claims into three groups or categories (page 613 in 111 STC): (i) The levy is unconstitutional-outside the provisions of the Act or not contemplated by the Act. (ii) The....
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....circular dated September 17, 2004 and this is not denied by the Department and it is not even denying the nature of construction/services rendered by the petitioner was exempted from to payment of service tax. What one has to see is whether the amount paid by the petitioner under mistaken notion was payable by the petitioner. Though under the Finance Act, 1994 such service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because of the nature of the institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, the authority lacked authority to levy and collect such service tax. In case, the Department were to demand such payments, the petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment of amount, would not authorize the Department to regularise such payment. When once the Department had no authority to demand service tax from the respondent because of its circular dated Septembe....
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....n, would not be a duty or "service tax" payable in law. Therefore, once it is not payable in law there was no authority for the Department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract section 11B. Therefore, it is outside the purview of section 11B of the Act." 21. The Madras High Court in 3E Infotech vs. Customs, Excise & Service Tax Appellate Tribunal & Anr. 2018 SCC OnLine Mad 13637 propounded a similar principle as would be evident from the following extract of that decision:- "12. On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 ....
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.... that interest has been duly recognized as being a necessary corollary to a wrongful retention of capital. We deem it apposite to extract the following passages from the decision of a Division Bench of the Allahabad High Court in Wig Brother (Builder & Engineers) v. Union of India:- "27. It may be mentioned that money doubles in six years (because of interest). In this case, the petitioner has avoided payment of cess for about 12 years, counting from the date of the demand notice dated 20.7.1991. Thus, even though we are dismissing this petition, the petitioner has really won the case, because he did not have to pay interest from 20.7.1991 till today. 28. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all but is the normal accretion on capital. Had the petitioner paid the amount in question in July, 1991, when it was due, the respondents would have invested the same somewhere and earned interest thereon. Instead, the petitioner has kept the money with himself for about 12 years and has earned interest thereon. Hence for every Rs. 100 which the petitioner had to pay in July, 1991, he has in fact, earned an....
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....ll for consideration of the Supreme Court in Sandvik Asia Ltd. v. CIT. While dealing with the liability of the department to bear that burden in case of unjustified retention of monies, the Supreme Court had observed as follows:- "29. In our view, there is no question of the delay being "justifiable" as is argued and in any event if the Revenue takes an erroneous view of the law, that cannot mean that the withholding of monies is "justifiable" or "not wrongful". There is no exception to the principle laid down for an allegedly "justifiable" withholding, and even if there was, 17 (or 12) years' delay has not been and cannot in the circumstances be justified. xxxx xxxx xxxx 31. At the initial stage of any proceedings under the Act any refund will depend on whether any tax has been paid by an assessee in excess of tax actually payable to him and it is for this reason that Section 237 of the Act is phrased in terms of tax paid in excess of amounts properly chargeable. It is, however, of importance to appreciate that Section 240 of the Act, which provides for refund by the Revenue on appeal, etc., deals with all subsequent stages of proceedings and therefo....
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....e balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only up to the date of refund of tax while they take the benefit of assesses' funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to lakhs and lakhs of assesses. Very large number of assesses are adversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to them as has happened in the instant case. It is a case of the appellant as set out above in the instant case for Assessment Year 1978-1979, it has been deprived of an amount of Rs. 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. 47. The word "compensation" has been defined in P. Ramanatha Aiy....
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.... in Union of India v. Tata Chemicals Ltd.20. Highlighting the compensatory element of such interest being provided by courts, the Supreme Court had held as follows:- "37. A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorisedly by the Department. When the collection is illegal, there is corresponding obligation on....
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.... which was succinctly explained and acknowledged by the Supreme Court in South Eastern Coalfields Ltd. vs. State of Madhya Pradesh & Ors. (2003) 8 SCC 648 as under:- "21. Interest is also payable in equity in certain circumstances. The rule in equity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement (see Chitty on Contracts, 1999 Edn., Vol. II, Para 38-248 at p. 712). Interest in equity has been held to be payable on the market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction and such circumstances can be many. xxxx xxxx xxxx 28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the "act of the court" embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts and the law. The factor attrac....