2021 (3) TMI 964 - HC - Customs

Refund of Special Additional Duty (SAD) - rejection on the ground that the refund claim was filed beyond the time limit of one year from the date of payment of duty and also on the ground that the sales invoice submitted by the appellant along with refund claim did not indicate charging of sales tax - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT - The issue relating to limitation is a question of law to be considered and it is found that the assessee did not have an opportunity to place their submissions before the respondent before ever the order impugned in the said petition was passed. Not providing an opportunity of personal hearing would result in violation of the principles of natural justice, which would be one of the grounds to entertain a writ petition. Therefore, the matter remitted back to the respondent to reconsider the claim of refund only with regard to the aspect of limitation, as the legal position with regard to entitlement of refund - appeal allowed by way of remand.

Issues Involved:
1. Rejection of refund claim based on the time limit.
2. Rejection of refund claim due to sales invoice not indicating sales tax.
3. Availability and efficacy of alternate remedy.
4. Entitlement to refund of Special Additional Duty (SAD).
5. Principles of natural justice regarding personal hearing.

Issue 1: Rejection of refund claim based on the time limit

The appellant's refund claim was rejected by the respondent on the ground that it was filed beyond the one-year time limit from the date of payment of duty. The appellant argued that the correct date to consider for the time limit should be the date when the goods were cleared (10.12.2014), making the refund claim timely. The court cited the Delhi High Court's decision in the case of Sony India Pvt. Ltd. v. Commissioner of Customs, which held that no limitation period could be imposed for refund claims as the right to claim refund accrues only upon the sale of goods. Therefore, the court remitted the matter back to the respondent to reconsider the claim solely on the issue of limitation, emphasizing that the principles of natural justice were violated as the appellant was not given a personal hearing.

Issue 2: Rejection of refund claim due to sales invoice not indicating sales tax

The respondent rejected the appellant's refund claim on the ground that the sales invoices did not indicate the charging of sales tax but rather stated that the sale of poultry feed supplement was exempt from sales tax. The court referred to the decision of the Principal Bench of the Delhi Tribunal in the case of Gazal Overseas v. Commissioner of Customs, which clarified that the refund of SAD is admissible as long as appropriate VAT/sales tax was paid, even if the rate was NIL. This decision had been accepted by the Department, and similar writ petitions had been allowed by various learned Single Judges of the court.

Issue 3: Availability and efficacy of alternate remedy

The appellant chose to file a writ petition instead of appealing to the Commissioner of Customs (Appeals), arguing that the appeal remedy was not efficacious as the order was contrary to statutory provisions. The court noted that the availability of an alternate remedy is not an absolute bar, especially when the legality of the refund claim had been accepted by the Department pursuant to the decision in the case of Gazal Overseas. The court held that it was justified in entertaining the appeal and the writ petition.

Issue 4: Entitlement to refund of Special Additional Duty (SAD)

The court acknowledged that the issue of entitlement to the refund of SAD had been settled by the decision of the Principal Bench of the Delhi Tribunal in Gazal Overseas, which stated that the refund is admissible as long as appropriate VAT/sales tax was paid, regardless of the rate. The court also referred to similar decisions by various learned Single Judges and the Hon'ble Division Bench in the case of HLG Trading, which upheld the refund claim.

Issue 5: Principles of natural justice regarding personal hearing

The appellant argued that the respondent did not provide an opportunity for a personal hearing despite the appellant indicating the need for one in their application. The court found that not providing a personal hearing resulted in a violation of the principles of natural justice. Therefore, the court remitted the matter back to the respondent for reconsideration, ensuring an opportunity for a personal hearing.

Conclusion:

The court allowed the writ appeal, set aside the impugned order, and remanded the matter back to the respondent for fresh consideration on the issue of limitation alone. The respondent was directed to complete this exercise within 12 weeks, ensuring an opportunity for a personal hearing to the appellant.

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