TaxTMI 
TaxTMI 
2025 (7) TMI 220
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....he briefly stated facts of the case are that the appellant, as a proprietorship firm, has been engaged in providing horizontal directional drilling services enabling laying of cables, pipelines and works contract services for laying of pipelines/cables etc. During the period 2007-08 to 2011-12, the appellant had been registered with the Service Tax Department under the category of 'work contract services', 'site preparation and clearance services' and 'commercial or industrial construction services' etc. 2.1. Pursuant to investigations conducted into the activities of the appellant, a Show Cause Notice dated 17.10.2012 demanding service tax as computed therein, with interest and penalty after adjustment of service tax already paid. During the course of investigations the appellant had deposited Rs. 33,73,971/- towards their purported service tax liability and interest. 2.2. Thereafter, the said Show Cause Notice was adjudicated vide Order-in-Original dated 31.03.2014, whereunder the service tax liability to the tune of Rs. 1,93,01,617/- along with interest and penalties were confirmed. On appeal, the CESTAT, vide Final order bearing No. 75793/2021 date....
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....such interest ought to have been automatically paid. 3.1. It is submitted by the appellant that the ld. appellate authority erroneously faulted the appellant for not challenging the aforesaid Order-in-Original dated 05.07.2022; that the appellate authority failed to appreciate that, vide the said refund sanctioning order, the claim for interest had neither been rejected nor specifically adverted to and, in such circumstances it was unclear as to whether the said claim for payment of interest stood formally rejected. 3.2. It is also the appellant's contention that the Ld. Commissioner, CGST & CX, Appeals-1, Kolkata has erred by holding that the appeal filed by the appellant was not maintainable, as the appellant has not challenged Order-in-Original 01/R/CGST/BBD-I/KOL- North/2022-23 dated 05.07.2022; the appellant submits that the purported observations recorded in paragraph No. 6.0, page 5 of the impugned order are illegal, arbitrary and unsustainable; if the Assistant Commissioner, BBD Bag-I, Kolkata North Commissionerate was of the view that interest was not payable, then he should have expressly recorded in the order that no interest was payable. However, there is no discu....
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....evenue submits that the refund has been granted within 90 days from the date of application for refund and hence the ld. adjudicating authority and appellate authority has rightly rejected the claim of interest made by the appellant. 5. Heard both sides and perused the appeal records. 6. I find that the in this case, appellant had deposited Rs. 33,73,971/- towards their purported service tax liability during the course of investigations. The service tax liability of the appellant has been decided by the CESTAT, vide Final order No. 75793/2021 dated 03.12.2021, whereby the appeal filed by the appellant was allowed, with consequential relief. I also observe that said final order has been accepted by the Revenue and hence, attained finality. 6.1. Pursuant to the aforesaid final order, the appellant applied for refund of Rs. 33,73,971/- deposited by them during the course of investigations. Vide Order-in-Original dated 05.07.2022, the aforesaid claim for refund of Rs. 33,73,971/- was allowed under Section 35F of the Excise Act read with paragraph No. 5.4 of the circular No. 984/08/2014-CX dated 16.09.2014. However, the Departmental authority did not sanction interest on the af....
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....deration. Therefore, at this stage, we will not consider the matter regarding maintainability of the Writ Petition, as first we have to look to the provisions of 11B of the Act and then decide whether Section 11B is applicable to the facts of the case as finding thereon would have bearing for considering the issue of maintainability of Writ Petition. Section 11B of the Central Excise Act reads as under : "11B. Claims for refund of duty : (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the document referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person." 18. From the reading of the above Section, it refers to claim for refund of duty o....
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....e tax" from the respondent company, the department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect such service tax by the appellant, it would not give them the authority to retain the amount paid by the petitioner, which was initially not payable by them. Therefore, mere nomenclature will not be an embargo on the right of the petitioner to demand refund of payment made by them under mistaken notion. 20. In the case of Hind Agro Industries Ltd. v. Commissioner of Customs reported in 2008 (221) E.L.T. 336 (Del.), it was the case where cess amount was paid under protest by the appellants. In that case after referring to Mafatlal Industries case (supra), the lordships of Delhi High Court have held that in Mafatlal Industries case, Hon'ble Supreme Court was dealing with the case of refund of duty payable within the meaning of either the Central Excises and Salt Act, 1944 or the Customs Act, 1962 as the case may be, wherein they have held that all claims for refund ought to be filed only in accordance with the Customs Act. Therefore, it did not include the paymen....
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....be applicable. When once there was no compulsion or duty cast to pay this service tax, the amount of Rs. 1,23,96,948/- paid by petitioner under mistaken notion, 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. 24. The learned Counsel for the appellant has also contended that when the order of refund was rejected, the respondent could have approached this Court instead of filing the appeal choosing a wrong forum, could not be a deficit coming in the way to claim refund. 25. However, the petitioner has not approached the Tribunal after the order passed by 1st appellate authority and they have approached this Court. Therefore, even the provisions of Section 35B(1)(b) would not be applicable. From the facts of the case as discussed herein above, it emerges that petitioner has approached this Court contending that Section 11B is not applicable as there was no duty cast on them to pay "service tax" and they h....
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....ed Third Member opined that when tax was paid as a mistake of law, the limitation under Section 11B of the Act, 1944 is not a hurdle for refund of tax. In view of majority opinion, the impugned decision was taken by holding that Section 11B of the Act, 1944, cannot be pressed into service, in a case of this nature where tax itself is admittedly paid as a mistake of law. 7. Mr.Dominic Fernandes, learned counsel for the appellant fairly submits that he is proposing only one substantial question of law i.e., "whether, while processing/considering a claim for refund, the limitation contemplated under Section 11B of the Excise Act, made applicable to service tax under Section 83 of the Finance Act, 1994 would be applicable or inapplicable, in a case where any amount even though it is not payable as service tax, is voluntarily paid by the assessee?" 8. To elaborate, he placed reliance on the judgment of the Hon'ble Supreme Court in Mafatlal Industries Ltd. v Union of India 1. He submits that in the light of this judgment, the Tribunal has committed an error of law 1997 (89) E.L.T.247 (S.C.) which has given rise to the aforesaid substantial question of law. The other....
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....x, the department cannot retain the amount paid and in that view of the matter, bar of limitation under Section 11B of the Act, 1944 cannot be pressed into service. 14. In this view of the matter, in our opinion, no substantial question of law subsists and needs to be answered, because curtains are already drawn on this issue by various High Courts. Thus, admission is declined." 6.7. Thus, by relying on the decisions cited supra, the impugned order rejecting the appeal filed by the appellant on the ground of maintainability is not sustainable and hence I set aside the same. I hold that the appellant are entitled for granting of interest from the date of deposit during the course of investigation till the date of refund. 6.8. Regarding the rate of interest payable, the appellant has cited the decisions in the case of Sandvik Asia and claimed interest @12%. The relevant portion of the decision of the Apex Court‟s judgement in the case of Sandvik Asia Ltd vs Commissioner Of Income Tax-I, Pune & Ors - Order dated 27 January, 2006, is reproduced below: "A. Whether in view of binding decisions of this Court the respondents are estopped from urging that compe....
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....he amount of refund due from the date immediately following the expiry of the period of [three] months aforesaid to the date on which the refund is granted. ..... We have given our anxious and thoughtful consideration on the elaborate submissions made by counsel appearing on either side. In our opinion, the High Court has failed to notice that in view of the express provisions of the Act an assessee is entitled to compensation by way of interest on the delay in the payment of amounts lawfully due to the appellant which were withheld wrongly and contrary to the law by the Department for an inordinate long period of up to 17 years. ..... 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. ... At the initial stage of any proceedi....
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....o were all in charge of this case at the appropriate and relevant point of time and because of whose inaction the appellant was made to suffer both financially and mentally, even though the amount was liable to be refunded in the year 1986 and even prior to. A copy of this judgment will be forwarded to the Hon'ble Minister for Finance for his perusal and further appropriate action against the erring officials on whose lethargic and adamant attitude the Department has to suffer financially." 6.9. I find that the same view has been held by the Hon'ble Calcutta High Court in the case of Rajendra Kumar Jain v. Commissioner of Customs (Port), Kolkata & anr. [CUSTA/3/2012 vide judgement dated 09.05.2024 - Calcutta High Court]. The relevant observations of the Hon'ble High Court are reproduced below: - "9. Learned senior standing counsel for the respondents now states that the Government of India, Ministry of Finance (Department of Revenue), New Delhi has issued a notification No. 70/2014/Customs (N.T.) dated 12.08.2014 in exercise of powers conferred under Section 129EE of the Customs Act, 1962 fixing the rate of interest @ 6% per annum for the purposes of the said Sectio....