TaxTMI 
TaxTMI 
2026 (3) TMI 1369
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....decided the above issue, in favour of the appellant, in the case of M/s. Harrisons Industries v. Commissioner of Commissioner of C.G.S.T. and Central Excise, Kolkata North [Final Order No. 76670 of 2025 dated 03.07.2025 in Service Tax Appeal No. 76006 of 2024 - CESTAT, Kolkata] wherein it has been held that interest is payable at the rate of 12% per annum from the date of deposit till the date of refund. The Ld. counsel further submitted that the said order was appealed by the Revenue before the Hon'ble High Court at Calcutta whereafter the Hon'ble High Court vide Order in CEXA/1/2026 and IA No. GA/1/2026 & anr. dated 20.02.2026 has dismissed the appeal filed by the Revenue by making the observation that there is no substantial question of law arising from the order of the Tribunal. Accordingly, the Hon'ble High Court has rejected the appeal filed by the Revenue. Thus, the Ld. Counsel for the appellant prayed for grant of interest at the rate of 12% on the amount refunded to them in terms of the ratio of the decisions cited supra. 3. On the other hand, the Ld. Authorized Representative of the Revenue contends that the appellant has voluntarily paid the said amount and hence,....
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....nce of the Department, pursuant to the search operations conducted by the Officers of the Directorate General of Central Excise Intelligence (DGCEI) at the appellant's factory premises and other premises on 18.07.2008, which fact has also been recorded at paragraph 2.0 of the impugned order dated 28.08.2025. Hence, I observe that such payment made by the appellant cannot be construed as a voluntary payment of central excise duty on the part of the appellant. For better appreciation of the facts, the relevant paragraph of the impugned order is reproduced below: - "2.0. The appellant M/s Premier Power Products (Calcutta) Pvt. Ltd are engaged in the manufacture of Cable Trays and parts and accessories falling under Chapter 85 of the CET, clearing the same to buyers like BHEL, Thermax, Jindal Steel & Power Etc. A search operation was conducted by the officers of DGCEI at the appellant's factory, office and residential premises on 18.07.2008. On departmental insistence, the appellant deposited Rs. 20, 00,000/- towards its purported duty liability through 2 post-dated cheques vide No. 522835 dated 05.08.2008 & 522836 dated 03.10.2008 for Rs. 10,00,000/- each." [paragraph ....
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....or 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 of excise only, it does not refer to any other amounts collected without authority of law. In the case on hand, admittedly, the amount sought for as refund was the amount paid under mistaken notion which even according to the department was not liable to be paid. 19. According to the appellant, the very fact that said amounts are paid as service tax under Finance Act, 1994 and also filing of an application in Form-R of the Central Excise Act would indicate that the applicant was intending to claim refund of the duty....
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.... 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 payment made under some other enactment, which for some reason had erroneously been made to the Customs authorities. Even otherwise by referring to paragraph 137 of Mafatlal Industries case, one has to see whether the amount claimed is unconstitutional and outside the provisions of Section 11B of the Act. 21. In the case of Nataraj and Venkat Associates (supra), this was pertaining to service tax wherein petitioner company was dealing in architectural services and paid service tax for the construction of the building car....
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....g on the above cited decision, this Bench, has allowed interest in respect of a deposit made during the course of investigation, while dealing with an identical issue, in the case of M/s. Harrisons Industries v. Commissioner of Commissioner of C.G.S.T. and Central Excise, Kolkata North [Final Order No. 76670 of 2025 dated 03.07.2025 in Service Tax Appeal No. 76006 of 2024 - CESTAT, Kolkata]. For the sake of ready reference, the relevant observations of the Bench in the aforesaid decision are reproduced below: - "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 afore....
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.... reproduced below: . . . 6.6. The same view has been held by the Tribunal, Larger Bench in the case of Credible Engineering v. Commissioner of Customs and Central Excise, which has been upheld by the Hon'ble Telangana High Court [Central Excise Appeal No. 03 of 2023 vide judgement dated 15.04.2024 - Telangana High Court]. The relevant part of the said decision rendered by the Hon'ble Telangana High Court is reproduced below: "3. This appeal filed under Section 35G of the Central Excise Act, 1944 (for short "the Act, 1944") takes exception to the order dated 05.09.2022 passed in Service Tax Appeal No.30781 of 2018 by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench at Hyderabad (Tribunal), whereby the appeal filed by the respondent was allowed by the said Tribunal. 4. It was pointed out that the respondent worked pursuant to 'Works Contract' between the period from 30.09.2012 to 30.06.2014 and paid service tax arising thereto. On 10.02.2017, it filed an application for refund of Service Tax of Rs.1,60,81,347/- by contending that under the Act, 1944 it was not liable to pay the tax and tax was paid as....
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....idering the judgment of the Hon'ble Supreme Court in case of Mafatlal Industries Ltd. (supra 1), the Delhi High Court held that the judgment of Mafatlal Industries Ltd. (supra) nowhere talks of a situation where the refund of a tax paid under the relevant Act albeit erroneously was required to be made under the Excise Act or the Customs Act and under no other enactment. It was clearly held that judgment of Mafatlal Industries Ltd. (supra 1) is of no 2008 (221) ELT 336 (Del.) assistance in a case where tax is erroneously paid as a mistake of law. 10. The Tribunal has also taken note of the judgment of Karnataka High Court in Commr. of C.Ex. (Appeals), Bangalore v. KVR Construction 3. The Karnataka High Court also considered the judgment of Delhi High Court in case of Hind Agro Industries Limited (supra 2) and the judgment of Mafatlal Industries Ltd. (supra 1) and in no certain terms made it clear that where the tax is admittedly paid as a mistake of law, the limitation will not come in the way for refund. 11. It is pointed out by both sides that the judgment of Karnataka High Court in case of KVR Construction's (supra 3) was unsuccessfully challenged before....
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....anted (whether called interest or otherwise) and hence the impugned judgment was contrary to a decision of this Court and ought to be reversed? ... E. Whether the High Court ought to have held that sections 240 and 244 of the Act refer to 'refund of any amount', which phrase clearly includes any amount (including interest) due by the Income Tax department to the assessee, and hence the appellant was entitled to interest on the delay in the payment of amounts due from the Income-tax department ? .... 243. Interest on delayed refunds. (1) If the Income-tax Officer does not grant the refund (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividend, within three months from the end of the month in which the total income is determined under this Act, and (b) in any other case, within three months from the end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at (twelve) per cent per annum on the amount directed to be refunded from the date immediately following the ....
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....d therefore is phrased in terms of 'any amount' becoming due to an assessee. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. ... ....It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, 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 D....
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....e Limited (supra) till statutory provision in the Act was enacted and a notification was issued thereunder providing for rate of interest on delayed refund of pre-deposit. With effect from the date on which the provision came in the statute, it shall hold the field and the rate of interest shall be governed by it. Since the period in question is prior to the notification providing for rate of interest on delayed refund of pre-deposit, issued under the Act, therefore, the case of the appellant shall be governed by the law laid down by the coordinate Bench of this Court in Madura Coats Private Limited (supra). 10. For all the reasons afore stated, the appeal is allowed, the impugned order No. A-34/KOL/2012 dated 23.01.2012 in Customs Appeal No.C/A/231/2006 [Shri Rajendra Kumar Jain v. Commissioner of Customs (Port), Kolkata) passed by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata is hereby set aside and it is held that the appellant is entitled for payment of interest 12% on the delayed refund of the amount of pre-deposit, which shall be paid by the respondents to the appellant within one month from the date of production of a certified co....
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....I also observe that the Revenue had filed an appeal against the above Order in M/s. Harrisons Industries (supra) before the Hon'ble High Court. The Hon'ble High Court has vide its Order dated 20.02.2026 dismissed the Revenue's appeal and passed the following order: - "On merits, this Court also finds no substantial question of law arises from the order of the tribunal. Hence, the appeal and the connected application being GA/2/2026 are dismissed." 8.2. Thus, in view of the above, I find that the issue involved in the present appeal is no longer res integra. Accordingly, by relying on the decision of this Tribunal in the case of M/s. Harrisons Industries (supra), as affirmed by the Hon'ble High Court, I find that the appellant is eligible for interest @12% from the date of deposit till the date of refund. 9. The Ld. Authorized Representative of the Revenue has mainly relied on the decision of the Hon'ble Delhi High Court in the case of M/s. Goldy Engineering Works v. Commissioner of Central Excise [(2023) 10 Centax 189 (Del.)], which has been affirmed by the Hon'ble Supreme Court as reported in 2025 (4) TMI 1186 - SC. I find that in the above case cited by the Revenue....