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2021 (1) TMI 753 - HC - Central ExciseRecovery of erroneous refund - Section 11A of the Central Excise Act, 1944 along with interest - Education and Higher Education cess were interpreted as exempt by petitioners in view of available exemption under notification dated 25.04.2000 - petitioner has questioned the very jurisdiction of the Assistant Commissioner to raise a demand for recovery of the refund already released - HELD THAT - Section 11A makes a distinction between the cases of duty of excise not having been levied, paid or short levied or short paid or erroneously refunded for the reason of fraud, collusion or any misstatement or suppression of facts or contravention of the provisions of the Act or the rules with intent to evade payment of duty and in cases where none of these elements is present. Under sub-section 1 of Section 11A when any such duty of excise has not been levied, paid or short levied or short paid or erroneously refunded for reasons other than fraud, collusion etc. the Central Excise Officer would within 2 years from the relevant date serve a notice on the person chargeable to the duty calling upon him to show cause why the amount specified in the notice along with interest not be recovered. Sub-section 1 of Section 11A thus authorizes the Central Excise Officer to recover any duty of excise, besides others, which has been erroneously refunded. It is in this context that the term erroneously refunded assumes significance. When the Excise Officer passed the order of refund, he was applying the law laid down by the Supreme Court which by virtue of Article 142 of the Constitution is the law of the land. He had no other choice but to follow the decision of the Supreme Court in case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI 2017 (11) TMI 655 - SUPREME COURT . Any other action on his part would be wholly illegal. His order of refund thus was in consonance with the law declared by the Supreme Court at the time when he was passing the order. In our view any subsequent change in the legal position, would not permit him to invoke the powers under Section 11A of the Central Excise Act. As is well settled, all legal proceedings on the date when they are being decided by any Court, would be governed by the law laid down by the Supreme Court which prevails on such date. As is often happens, a decision of the Supreme Court is reviewed, reconsidered or overruled by larger Bench. Such subsequent decision would undoubtedly clarify the position in law and such declaration would undisputedly apply to all pending proceedings, the proceedings which are closed in the meantime , cannot be reopened on the basis of subsequent declaration of law by the Supreme Court - Any other view would lead to total anarchy. Based on the judgment of the Supreme Court several proceedings would have been decided. If years later such view is reversed, the parties who had not carried the proceedings in higher forum and thus not kept the proceedings alive, cannot trigger a fresh look at the decision already rendered by the competent court on the basis of the previous judgment of the Supreme Court which was correctly applied at the relevant time. If the department was aggrieved by the refund order passed by the Assistant Commissioner, it was open for the department to file appeal against such order as is provided in Section 35 of the Central Excise Act, 1944. It is well settled that under section 35 even the department can be stated to the person aggrieved against an order that the competent authority may pass. Thus the order of assessing officer is open to challenge at the hands of the department under Central Excise Act unlike in case of Income Tax Act, 1961 where the assessing officer s order of assessment cannot be appealed against by the department and a limited review is available under Section 263 of the Income Tax Act, 1961 - Section 11A of the Central Excise Act does not authorize the Assistant Commissioner to revise or review his own order. In the show cause notice effectively what he proposes to do is revise and recall his own order on the ground that the law that he applied when he passed order of refund, has since been changed. This in our opinion is wholly impermissible. The impugned show cause notice issued by the Assistant Commissioner of Central Goods Service Tax, Agartala is set aside - Petition allowed.
Issues Involved:
1. Challenge to the show-cause notice dated 03.07.2020. 2. Jurisdiction of the Assistant Commissioner to recover erroneously refunded amounts. 3. Applicability of the Supreme Court decisions in SRD Nutrients and Unicorn Industries. 4. Interpretation and application of Section 11A of the Central Excise Act, 1944. 5. Legal principles regarding erroneous refunds and subsequent changes in law. Detailed Analysis: 1. Challenge to the Show-Cause Notice Dated 03.07.2020: The petitioner contested the show-cause notice issued by the Assistant Commissioner of Central Goods & Service Tax, Agartala, which demanded the recovery of ?53,06,055/- refunded erroneously under Section 11A of the Central Excise Act, 1944. The petitioner argued that the refund was granted based on the Supreme Court's decision in SRD Nutrients, which was valid at the time. 2. Jurisdiction of the Assistant Commissioner to Recover Erroneously Refunded Amounts: The petitioner questioned the jurisdiction of the Assistant Commissioner to issue the show-cause notice for recovery. The court noted that the Assistant Commissioner's original refund order was based on the prevailing Supreme Court decision in SRD Nutrients. Any subsequent change in law, such as the decision in Unicorn Industries, does not grant the Assistant Commissioner the authority to recover the refunded amount under Section 11A of the Central Excise Act. 3. Applicability of the Supreme Court Decisions in SRD Nutrients and Unicorn Industries: The court examined the impact of the Supreme Court's decisions in SRD Nutrients and Unicorn Industries. Initially, SRD Nutrients held that education cess and higher education cess could not be collected if the basic excise duty was exempt. However, Unicorn Industries later declared the SRD Nutrients decision as per incuriam. The court concluded that the Assistant Commissioner’s refund order, based on SRD Nutrients, was valid when issued and could not be retrospectively invalidated by the subsequent Unicorn Industries decision. 4. Interpretation and Application of Section 11A of the Central Excise Act, 1944: Section 11A pertains to the recovery of duties not levied, paid, short-levied, short-paid, or erroneously refunded. The court highlighted that Section 11A distinguishes between cases involving fraud, collusion, or suppression of facts and those that do not. The Assistant Commissioner’s refund order, being in line with the Supreme Court's decision at the time, did not fall under the category of erroneous refund that could be recovered under Section 11A. 5. Legal Principles Regarding Erroneous Refunds and Subsequent Changes in Law: The court emphasized that legal proceedings should be governed by the law prevailing at the time of the decision. Subsequent changes in law do not permit reopening settled matters. The court referenced several Supreme Court decisions, including Priya Blue Industries and Flock (India) Pvt. Ltd., to support this principle. The court also noted that the department could have appealed the refund order but did not do so. Therefore, the Assistant Commissioner could not retrospectively apply the Unicorn Industries decision to recover the refunded amount. Conclusion: The court set aside the impugned show-cause notice dated 03.07.2020, concluding that the Assistant Commissioner lacked jurisdiction to recover the refunded amount based on a subsequent change in law. The petition was disposed of accordingly, and any pending applications were also disposed of.
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