2022 (1) TMI 132 - AT - Service Tax

Refund of CENVAT Credit - processing of application for one time settlement under SVLDR scheme - refusal of refund by way of change of opinion - HELD THAT - This is nothing but a callous attitude of the Department in giving the rightful refund to the assessee, which is highly undesirable. Accordingly, it is held that the amount of ₹ 2,50,265/-, which was deposited under wrong head by a common challan, should have been credited to the appellant at the time of processing of SVLDRS application. In such facts and circumstances, the said amount remains with the Department by way of Revenue deposit. The Department is directed to refund the said amount of ₹ 2,50,265/- with interest @ 12% p.a. as prescribed under Section 35FF of the Act, from the date of deposit till the date of refund of the said amount - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim under SVLDR scheme, Pre-deposit under wrong accounting code, Refusal of refund by Revenue, Applicability of Section 11B limitation, Interpretation of pre-deposit as revenue deposit, Board Circular clarification, Callous attitude of Revenue, Direction for refund with interest.

Refund Claim under SVLDR Scheme:
The appellant sought a refund for an amount not allowed by the Department during the processing of their application under the SVLDR scheme. The appellant had made a pre-deposit during the earlier round of litigation, and subsequently applied for a one-time settlement under the SVLDR Scheme in 2019. The Department issued various forms reflecting the pre-deposit amount and the balance payable under the scheme, leading to a dispute over the refund claim.

Pre-deposit under Wrong Accounting Code:
The appellant had made a pre-deposit under a specific accounting code during the earlier proceedings. However, the Department refused to recognize the full pre-deposit amount and insisted on a truncated amount under a different accounting code. This discrepancy led to the rejection of the appellant's refund application on the grounds of time bar, as the amount was deposited under the wrong accounting code.

Refusal of Refund by Revenue - Applicability of Section 11B Limitation:
The Court below rejected the refund application, citing time limitations under Section 11B. It was observed that any excess pre-deposit amount beyond the payable amount under the SVLDR scheme would not be refunded. The tax was deposited in 2018, and the limitation for refund expired in 2019, according to Section 11B.

Interpretation of Pre-deposit as Revenue Deposit - Board Circular Clarification:
The appellant argued that the pre-deposit made during the appeal process should be considered a revenue deposit, not a duty payment. Referring to a Board Circular, the appellant contended that the refund of pre-deposit should not be subject to the provisions of refund of duty under Section 11B.

Callous Attitude of Revenue - Direction for Refund with Interest:
The Tribunal criticized the Revenue for its attitude in denying the rightful refund to the appellant. It held that the amount deposited under the wrong accounting code should have been credited to the appellant during the processing of the SVLDRS application. The Tribunal directed the Department to refund the amount with interest, citing the appellant's entitlement to the refund and the Department's failure to act accordingly.

In conclusion, the Tribunal allowed the appeal, set aside the impugned order, and directed the Department to refund the disputed amount with interest within a specified timeframe. The judgment highlighted the importance of fair treatment and adherence to procedural requirements in handling refund claims under the SVLDR scheme.