2019 (7) TMI 158 - HC - Customs

Refund of R and D Cess paid by the petitioners - period April 2017 to June 2017 - respondent No.1 has rejected the claim of the petitioners on the ground that there is no provision in the Act for refund of Cess paid inadvertently on account of repealment of the Act. Whether the respondents can retain the R D Cess which has been collected without authority under the provisions of Research and Development Cess Act, 1986 as the said Act itself has been repealed w.e.f., 1st April 2017 and hence the rejection of refund claim of R D Cess is violative of statutory provisions as also Article 265/300A of the Constitution? HELD THAT - It is well settled law that any amount paid by mistake or through ignorance of the repealed Act deserves to be refunded on the claim of refund made by the petitioners, retention of such amount would be hit by Article 265 of the Constitution of India - The claim of refund of the petitioners cannot be denied for the reason that there is no legal provision to refund R D Cess paid by the petitioners. No amount can be withheld by the respondents without authority of law under the said pretext. Any money collected, retained without authority of law requires to be refunded to which a citizen is entitled. Hence, the petitioners are entitled to the said Cess amount deposited subsequent to repeal of the Act without any interest by the respondent Nos.2 to 4. The respondent Nos.2 to 4 shall refund the R D Cess paid by the petitioners respectively in an expedite manner in any event not later than four weeks from the date of receipt of the certified copy of the order - petition allowed - decided in favor of petitioner.

Summary

Issues:
Petition challenging the letter seeking refund of R and D Cess paid, Repeal of the Research and Development Cess Act, 1986, Claim of refund by petitioners, Authority to process refund claims, Violation of statutory provisions and Constitutional rights.

Analysis:
1. The petitioners challenged a letter seeking refund of R and D Cess paid during April-June 2017, after the Research and Development Cess Act, 1986 was repealed by the Finance Act, 2017. They claimed refund as they were unaware of the repeal and paid the Cess inadvertently. The respondent rejected the claim citing lack of provision for refund post-repeal.

2. The main contention was whether the respondents could retain the Cess collected without authority under the repealed Act. The petitioners argued that the rejection of the refund claim violated statutory provisions and Constitutional rights. They relied on legal precedents emphasizing the obligation to refund amounts paid by mistake or ignorance of the law.

3. The respondents, however, argued that post-repeal, they were not authorized to process refunds as the Cess amount had become part of the public account of India. They contended that the Cess paid by the petitioners lay in the Consolidated Fund of India, managed by the Ministry of Finance, and there was no legal provision for refund under their jurisdiction.

4. The Court referred to relevant judgments highlighting that any amount paid in error or ignorance of the repealed Act should be refunded, as retention without authority of law would violate Constitutional provisions. The respondents were directed to refund the Cess amounts paid by the petitioners after the Act's repeal, without interest, within four weeks.

5. The Court's decision favored the petitioners, emphasizing the obligation to refund amounts paid mistakenly, even after the repeal of the Act. It clarified that no money collected without legal authority could be withheld, and citizens were entitled to refunds. The respondents were instructed to expedite the refund process for the Cess amounts paid by the petitioners post-repeal.