TaxTMI 
TaxTMI 
2026 (3) TMI 1464
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.... reached this Tribunal and this Tribunal vide Final Order No. 76162 of 2023 dated 13.07.2023 has dropped the proceedings raised against the appellant. 2.2. Pursuant to the above order passed by the CESTAT, the appellant filed a refund application vide Sevottam Receipt No. 010368 dated 24.08.2023 seeking refund of the amount of Rs.7,50,000/- deposit during the course of investigation for the above period. 3. The Ld. Assistant Commissioner of Customs, Appraising Refund Section (Port), Custom House, Kolkata, vide the Order-in-Original No. KOL/CUS/AC/ARS (Port)/391/2024 dated 07.06.2024 has adjudicated the above refund application filed by the appellant and sanctioned the refund of Rs.7,50,000/- in favour of the appellant herein under the provisions of Section 27 of the Customs Act, 1962. However, the issue of grant of interest in respect of the above refunded amount was not discussed by the ld. refund sanctioning authority in the above order. 3.1. Accordingly, an appeal was preferred by the appellant before the Ld. Commissioner of Customs (Appeals), Custom House, Kolkata, who, by way of the impugned order dated 19.11.2024, has rejected the appeal filed by the appellant and up....
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....S/AC/ARS (Port)/391/2024 dated 07.06.2024. The ld. adjudicating authority, however, has not sanctioned interest on the said amount while sanctioning the refund. The same order has been upheld by the Ld. Commissioner (Appeals) vide the impugned order dated 19.11.2024. 9. Having gone through the submissions made by both the sides, I find that the above amount deposited by the appellant during the course of investigation in this case was under the mistaken impression that they were liable to pay duty. It has been pointed out by the appellant that such payment was made at the instance of the Department. I also find that the appellant has always disputed their liability. Only after the passing of the Final Order No. 76162 of 2023 dated 13.07.2023 by this Tribunal, the issue has been laid to rest. Hence, I am of the view that the said amount deposited by the appellant during the investigation cannot be construed as a voluntary payment towards duty but rather as a deposit made under a mistaken notion as to their liability, at the insistence of the Revenue. 10. I also find that the issue as to eligibility of the appellant to interest on the above deposited amount at the rate of 12% f....
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.... of investigations. In view of the Final order No. 75793/2021 dated 03.12.2021 of this Tribunal, allowing the appeal filed by the appellant with consequential relief, there is no service tax liability payable by the appellant. Thus, the amount paid by the appellant during investigation takes the shape of a 'pre deposit' made during investigation and not service tax payment. Thus, I find that the provisions of section 11B of the Central Excise Act, 1944 made applicable to service tax matters by Section 83 of the Finance Act, 1994 are not attracted for the refund of the amount pre-deposited during the course of investigation. Once, the appellant succeeds in his appeal, the amount pre-deposited is to be returned to the appellant along with interest. There is no need for filing any application for this refund as provided under Section 11B of the Central Excise Act, 1944. Refund of the amount deposited along with interest is payable automatically. 6.5. I find that this view has been held by the Hon'ble Karnataka High Court in the case of Commissioner of C.Ex., Bangalore v. KVR Construction [2012 (26) S.T.R. 195 (Kar.)]. The relevant part of the said decision are reproduced belo....
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..../services rendered by the petitioner was exempted from to payment of Service Tax. What one has to see is whether the amount paid by petitioner under mistaken notion was payable by the petitioner. Though under 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, authority lacked authority to levy and collect such service tax. Incase, the department were to demand such payments, 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 17-9-2004, the payment made by the respondent company would not partake the character of "service tax" liable to be paid by them. Therefore, mere payment....
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....f excise, therefore bar of limitation under Section 11B cannot be applied because such limitation would come in the way of any person claiming refund of any duty of excise and interest. 22. In the case of Commissioner of Central Excise, Bangalore v. Motorola India Pvt. Ltd. (supra) the Division Bench of this Court considered similar issue. It was a case where excess amount was paid over duty under Central Excise Act on the direction of the Department. There was an application for refund of amount and the same came to be rejected by the Assistant Commissioner on the ground of lapse of time. It was confirmed by both the Appellate Authority and also the Tribunal. Aggrieved by the order of the Tribunal, revenue came up before the High Court. Their lordships of the Division Bench held that order of the Tribunal to allow the claim on the basis that amount paid by mistake cannot be termed as duty in the said case was justified and therefore applying the law laid down in the decision of Apex Court in the case of India Cements Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 358, dismissed the appeal. 23. Now we are faced with a similar situation where the claim of t....
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....he 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 a mistake of law. The said application was dismissed on 05.06.2017 by the Assistant Commissioner of Customs, Central Excise & Service Tax, Hyderabad. 5. Aggrieved by the said order, the respondent company preferred an appeal, which came to be dismissed on 28.02.2018 by the Commissioner of Customs and Central Tax (appeals-I), Hyderabad. The respondent then approached the Customs, Excise & Service Tax Authority by filing Service Tax Appeal No.30781 of 2018. 6. During the course of hearing, it is ....
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....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 the Hon'ble Supreme Court and SLP was dismissed on 11.07.2011 which is taken note of by the Tribunal. 12. The judgment of this Court in Vasudha Bommireddy v. Assistant Commissioner of S.T., 2012 (26) S.T.R. 195 (Kar.) Hyderabad 4 was relied upon by other side by contending that the judgment of Karnataka High Court in KVR Construction (supra 3) was considered and this Court also held that when a tax is paid as a mistake of law, the embargo of limitation will not come in the way of claim of refund. ....
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.... 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 expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation : If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. 244. Interest on refund where no claim is needed. (1) Where a refund is due to the assessee in pursuance of an order referred to in sectio....
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....d 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 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. There cannot be any doubt that the award of interest on the refunded amount is as per the statute provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute, such provision has to govern the f....
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....ned 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 copy of this order. The substantial question of law is answered in negative ie. in favour of the appellant and against the respondents." 6.10. As per the decision of the Hon'ble Apex Court cited supra, interest at the rate of 12% is payable when the amount deposited during the course of investigation is refunded later. The same view has been taken in the following decisions: - (i) Green Valley Indusries Ltd. v. Commissioner of C.G.S.T. & C.Ex. [2022-TIOL-3108-CESTAT-KOL] (ii) Riba T....