2005 (8) TMI 26 - HC - Service Tax

Refund Petitioner demand for refund claim relating to inputs used in the manufacture of final products Held that appellant is liable for refund with interest

Summary

Issues:
Refund claim under Article 226 of the Constitution of India seeking a writ of mandamus for Rs. 44,20,58,831/-; Compliance with CESTAT directions for refund verification; Challenge of Commissioner (Appeals) order before CESTAT; Stay application rejection by Tribunal; Entitlement to refund; Statutory provisions of Section 11B13 and Explanation under the Central Excise Act, 1944; Jurisdiction under Article 226; Interest on delayed refunds under Section 11BB of the Act; Merger of orders; Legal effect of higher forum orders; Circular No. 571/9/2001-CX issued by CBEC; Direction for refund with interest; Stay request rejection.

Analysis:
The petition sought a refund of Rs. 44,20,58,831/- under Article 226 of the Constitution of India. The petitioner filed refund claims due to the inability to utilize duty credit on exported finished goods. CESTAT directed verification by the Commissioner (Appeals), resulting in a favorable order for refund. The Revenue challenged this before CESTAT, with a rejected stay application leading to the present petition. The petitioner argued for immediate refund based on accepted entitlement and rejected stay application, citing circulars from CBEC. The Revenue contended that statutory provisions allowed interest on delayed refunds, urging for no immediate refund. However, the court emphasized that once entitlement is established, delay in refund unjustly burdens taxpayers. The Revenue's argument on Section 11BB was dismissed, emphasizing the duty to promptly refund once ordered. The court also clarified the legal effect of higher forum orders and the importance of following superior authority decisions.

The court rejected the Revenue's argument on the merger of orders, stating that the Commissioner (Appeals) order remained operative. The court highlighted the Revenue's duty to refund promptly, especially in clear cases like the present. Referring to Circular No. 571/9/2001-CX, the court directed the Revenue to refund the amount with applicable interest within four weeks. The court dismissed the request for stay, emphasizing the urgency of the refund. Ultimately, the court allowed the petition for refund, emphasizing the Revenue's duty to promptly refund legitimate claims. The judgment underscored the significance of following superior authority orders and promptly refunding taxpayers in clear cases.