2022 (3) TMI 806 - AT - Service Tax

Refund of pre-deposit - overlapping period in the show-cause notice and the demand for the overlapping period as well - rejection of refund on the ground of time limitation - payment made prior to the filing of the first appeal - validity of retention of extra amount by Revenue - HELD THAT - The Order-in-Appeal dt. 27/02/2017 wherein the demand was directed to be restricted to 2008-09 alone has become final with both the Revenue as well as the appellant accepting the same and hence the same would be binding on both. When the demand is restricted to 2008-09 the predeposit if any cannot be calculated against the original demand including overlapping period and hence 7.5% should be worked out of the demand calculated being 4, 06, 391/- alone. Secondly when the adjudicating authority accepts the claim of the appellant and allowed a partial refund different reason or logic cannot be adopted for rejecting the other part of the same predeposit that is to say there cannot be two yardsticks for the same issue. Further the payment here is undoubtedly made prior to the filing of the first appeal and hence it satisfies the purpose of predeposit as having met by the appellant. Retention of extra amount by Revenue - HELD THAT - Since in the first place the collection of tax itself can happen with the authority of law and hence for retaining any extra penny also the same should be authorised by law. Both rejection and retention are without authority of law and hence the impugned order is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim rejected as time-barred.
2. Applicability of Section 35F of the Central Excise Act.
3. Authority to collect and retain the amount paid.
4. Interpretation of relevant legal provisions.
5. Applicability of precedents on refund claims.

Analysis:
1. The case involved a refund claim that was rejected as time-barred by the adjudicating authority. The appellant had requested a refund of payments made, but the authority proposed to reject the claim as beyond the prescribed time limit. Despite the appellant justifying the claim, the authority only partially sanctioned the refund, leading to a dispute over the balance amount of the refund.

2. The adjudicating authority held that the appellant was eligible for a refund of 7.5% of the original demand, which was considered overlapping and restricted to the demand for a specific period. However, the authority rejected the balance of the refund claim, citing limitations under Section 11B of the Central Excise Act. The appellant appealed this decision, arguing that the authority's reasoning for partial refund rejection was not legally sound.

3. The judge emphasized that the authority's acceptance of the appellant's claim for a partial refund should logically extend to the entire predeposit amount. The judge highlighted that the payment made by the appellant was not voluntary but enforced, indicating that retaining the excess amount by the Revenue without legal authorization was unjustifiable.

4. Citing legal precedents, the judge referred to cases where the courts ruled that amounts collected without legal authority must be refunded, even if paid under a mistaken notion. The judge reiterated that the Revenue cannot retain payments made by the appellant without the legal right to do so, emphasizing the need for adherence to legal provisions in refund cases.

5. The judge distinguished the Revenue's reliance on decisions primarily focused on limitations, asserting that the peculiar facts of the case at hand warranted a different interpretation. Ultimately, the judge concluded that both the rejection and retention of the refund amount were unauthorized by law. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CESTAT BANGALORE and the legal reasoning behind the decision to allow the appeal in favor of the appellant.