2024 (3) TMI 1108 - HC - Service Tax

Recovery of CENVAT Credit erroneously refunded alongwith interest - penalty for ineligible availment of CENVAT Credit - HELD THAT - It is not in dispute that petitioner has been refunded the said amount after the petitioner was found eligible by the Tribunal for refund and further by this Court towards interest for delayed refund of the CENVAT Credit. Accordingly, there is no ground to demand the same from the petitioner. Since the Revenue is approaching the Supreme Court impugning the order of the Tribunal as well as the order in appeal passed by this Court holding petitioner entitled to refund of the CENVAT Credit, it would be open to the Revenue to seek interim orders of protection from the Supreme Court. The Revenue cannot after being unsuccessful before this Court, on its own, declare the refund of the CENVAT Credit as well as interest on delayed payment to be erroneous refund. Unless the Revenue is successful before the Supreme Court or the Supreme Court so warrants, there is no question of any refund of the CENVAT Credit or refund of the interest paid to the petitioner. The impugned Show Cause Notice cannot be sustained. The same is accordingly quashed.

Summary

Issues involved: Impugning a Show Cause Notice directing recovery of CENVAT Credit, interest, and penalty for ineligible availment.

The judgment addresses the petitioner's challenge against a Show Cause Notice dated 19.01.2024, seeking recovery of CENVAT Credit and interest erroneously refunded, along with penalties, for allegedly ineligible availment. The petitioner had initially filed refund applications in 2013 and 2014, leading to subsequent proceedings including rejection of refunds, appeals, and orders by different authorities. The Tribunal had ruled in favor of the petitioner's refund claim, which was further upheld by the High Court directing payment of interest on delayed refunds. The disputed amount had already been paid to the petitioner based on these orders. The Show Cause Notice was issued despite the Tribunal and High Court decisions in favor of the petitioner, leading to the current challenge. The Notice cited the filing of a Special Leave Petition (SLP) in the Supreme Court, although the SLP had not been filed at the time of the proceedings.

The Court noted that the petitioner had been rightfully refunded the disputed amount following the Tribunal and High Court orders, with no valid grounds for recovery from the petitioner. The Revenue's intention to approach the Supreme Court to challenge the previous decisions was acknowledged, but until a decision was reached by the Supreme Court, there was no basis for the Revenue to declare the refunds as erroneous. The Court emphasized that unless the Revenue succeeded in the Supreme Court, there was no justification for demanding the refund amount or interest from the petitioner. Consequently, the Court quashed the Show Cause Notice, ruling in favor of the petitioner and dismissing any claims for recovery.