Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/3022

Whether interest on delayed payment of refund is available when payment has been made at the time of investigation?

Case:- S.S. DYES AND CHEMICALS VersusCOMMISSIONER OF CUSTOMS, MUMBAI
 
Citation:- 2016 (331) E.L.T. 477 (Tri. - Mumbai)
 
Brief facts:-The appeal is directed against Order-in-Appeal No. MUM-CUSTM-SXP-363-12-13, dated 14-6-2013 passed by the Commissioner of Customs (Appeals), Mumbai-I. Vide the impugned order the ld. appellate authority dismissed the applicant’s claim for interest on delayed refund of Rs. 30,53,905/- sanctioned to them vide order dated 27-8-2012 by the adjudicating authority.
The appellant imported consignments of citric acid and cleared the same under DEEC licence claiming the benefit of Notification No. 203/92-Cus., dated 19-5-1992 vide bills of entry filed in February, 1994. After clearance of the goods, a less charge memo was issued to the appellant vide notice dated 28-6-1994 alleging that they were not eligible for the benefit of said exemption Notification. In the meanwhile, in 1994 the appellant was forced to pay the duty involved of Rs. 30,53,905/-. The less charge demand was confirmed vide order No. S/16-Misc.-67/94-VII, dated 1-5-1996 against which the appellant preferred an appeal before the lower appellate authority who dismissed their appeal. The appellant preferred an appeal before this Tribunal and this Tribunal vide order No. A/427/WZB/2007/CSTB/C-I, dated 26-7-2007 [2007 (220)E.L.T.160 (Tribunal)] allowed their appeal. After the receipt of the order, the appellant filed refund application for refund of duty as well as interest. The original authority vide order dated 23-12-2008 allowed the refund of duty for Rs. 30,53,905/- but did not grant the refund of interest. The appellant preferred an appeal before the Commissioner (Appeals), who held that the payment made by the appellant in 1994 at the instance of DRI was not a payment of duty in pursuance to an order of assessment but it was merely a pre-deposit. Therefore no interest is payable on refund of deposit and hence the appellants are before them.
 
Appellant’s contention:- The ld. counsel for the appellant submits that the amount of Rs. 30,53,905/- paid by them was confirmed as duty under Section 28 of the Customs Act, 1962 vide order dated 1-5-1996 and whatever they paid at the time of investigation was appropriated towards such duty. Further, the lower adjudicating authority while passing the refund order in December 2008 vide Order No. ACAO/268/P.K./AC/2008-Gr.VII.B, dated 28-12-2008 has also considered the issue of unjust enrichment before the refund was sanctioned and therefore, what has been paid by them in 1994 is nothing but payment of duty and not a pre-deposit as held by the lower appellate authority. He further submits that they had filed refund claim as early as in September 1994 vide application dated 12-9-1994 for refund of the said amount of Rs. 30,53,905/-. With effect from 1-12-1995, Section 27A was inserted into the Customs Act vide Finance Act, 1995 which provide for payment of interest on delayed refund on the expiry of three months from the date of application of refund till the date of refund of the duty. Since the said section came into force in December 1995, they are entitled for the benefit of interest as provided for under Section 27A of the Customs Act. The ld. counsel also relies on the judgment of the Apex Court in the case of Ranbaxy Laboratories v. UOI [2011 (273)E.L.T.3 (S.C.) = 2012 (27)S.T.R.193 (S.C.)]wherein it was held that interest on delayed refund is payable under Section 11BB of the Central Excise Act, 1944 on the expiry of three months from the date of receipt of application under Section 11B and not from the date of order of refund or appellate order allowing such refund. He argued that the same principle will apply in the case of Customs refund also and therefore, they are rightly entitled for the benefit of interest. He also relies on the judgment of this Tribunal in the case of Toyota Kirloskar Auto Parts P. Ltd. v. CC, Bangalore [2009 (240)E.L.T.124]and Bipin Silk & Synthetics [2007 (213)E.L.T.442]and the judgment of Hon’ble High Court of Bombay in Voltas Ltd., 2005 (179)E.L.T.29in support of his contention.
 
Respondent’s contention:- The ld. AR appearing for the Revenue on the other hand contends that what has been paid by the assessee was only a deposit and not duty and therefore the appellant is not entitled to interest under Section 27A.
 
Reasoning of Judgment:-They havecarefully considered the rival submissions. In the instant case from the records of the case, it is seen that though the appellant made the payment of the impugned amount at the time of investigation, the said payment was confirmed as duty vide order dated 1-5-1996 and the said payment was appropriated towards duty demand. Therefore there is no doubt on the point that what has been paid by the appellant has been adjusted towards duty and it is not a mere pre-deposit as canvassed by the revenue. Further while passing the refund order, the lower adjudicating authority had considered the applicability of unjust enrichment and only thereafter, he granted the refund which also shows that what was sanctioned by refund was only duty paid in excess. If that is so, the question of payment of interest on delayed refund would automatically arise. In the instant case from the records, it is seen that the appellant had filed refund applications dated 12-9-1994 claiming a total refund of Rs. 30,53,905/-. Therefore, the provisions of Section 27A of the Customs Act, 1962 is clearly attracted and the said section provides for grant of interest on the expiry of three months from the date of refund application till the date of grant of refund irrespective of when the order for refund was actually passed. The ratio of the judgment of the Hon’ble Apex Court in the case of Ranbaxy Laboratories cited supra and of the Hon’ble High Court of Bombay in Voltas (supra) would apply to the facts of the case. However, since Section 27A of the Customs Act itself came into force only in May, 1995 and the appellant has claimed the interest for the period from 1-12-1995 onwards, we are of the view that the appellant is rightly entitled for interest at the applicable rates from 1-12-1995 onwards till the date of actual payment of refund. Thus the appeal is allowed with consequential relief.
 
Decision:- Appeal allowed.
 
Comment:- The analogy of the case is that Refund claim filed in September, 1994 and amount sanctioned on 28-12-2008 after passing of order in favour of appellant. Interest denied on the ground that amount paid during investigation is not duty but pre-deposit. Section 27A of the Customs Act provide for payment of interest on delayed refund on the expiry of three months from the date of application of refund till the date of refund of the duty. When amount is paid during investigation appropriated it represents duty and when refund sanctioned for duty paid in excess, interest would automatically arise on expiry of three months from date of filing application. Appellant is entitled for interest.

Prepared by:- Monika Tak

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com