2022 (5) TMI 1395 - HC - Central Excise

Refund of excess paid Swachh Bharat Cess and Krishi Kalyan Cess paid in excess alongwith excess Service Tax paid, alongwith interest - Jurisdiction - Reopening of assessment - HELD THAT - Considering the fact that assessment had already been carried out by the adjudicating authority via order dated 03.01.2019 and that the remand order of the appellate authority was confined two only two aspects, which is noticed that, there was no occasion for the adjudicating authority to pass a fresh assessment order reopening the entire assessment. In this case, since the amounts and period involved are not in dispute and because the adjudicating authority has not furnished an acceptable reason as to why the amount paid towards tax and cess i.e., Rs.36,27,615/- Rs.36,94,642/- less Rs.67,027/ is not refunded, we are inclined to allow the writ petition insofar as the refund of the actual excess amount paid by the petitioner on account of the service tax and cess is concerned. It is not in dispute that statutory interest gets triggered under Section 11BB of the 1944 Act, once the stipulated period for refund of the amount gets over (in this case, the stipulated period is three months commencing from the date of receipt of application under sub-section (1) of Section 11BB of the 1944 Act) - there cannot be any estoppel against a statute. Once the statute provides for payment of interest and the stipulated conditions are fulfilled, the respondent/revenue would be obliged, in law, to pay the interest. The respondent/revenue will pay interest on Rs.2,32,09,285/- at the rate of 6% p.a. (simple), commencing from 02.02.2018 till the date of payment i.e., 03.01.2019 - The respondent/revenue will remit to the petitioner the excess amount paid towards tax and cess i.e., Rs.36,27,615/- (Rs.36,94,642 less Rs.67,027/, which, according to the petitioner was a calculation error. Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of the officer passing the impugned order.
2. Requirement of pre-show cause notice consultation.
3. Provision of personal hearing to the petitioner.
4. Scope of adjudication as per the remand order.
5. Accuracy of the facts in the show cause notice.
6. Refund of the cess amount and interest thereon.
7. Short payment of tax and penalties imposed.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Officer:
The petitioner contended that the impugned order dated 30.06.2020 was passed by an officer who lacked jurisdiction. According to the petitioner, demands exceeding Rs.50,00,000/- should be adjudicated by an Additional/Joint Commissioner or a Commissioner if the demand exceeds Rs.2,00,00,000/-. This argument was supported by paragraph 11.1 of the CBEC circular dated 10.03.2017.

2. Requirement of Pre-Show Cause Notice Consultation:
The petitioner argued that no pre-show cause notice consultation was carried out, despite the demand exceeding Rs.50,00,000/-. This was a requirement under paragraph 5 of the CBEC circular dated 10.03.2017. The court noted that this procedural lapse was not disputed by the respondent.

3. Provision of Personal Hearing:
The petitioner asserted that no personal hearing was provided before the impugned order was passed. The court found that this procedural infraction was also not contested by the respondent.

4. Scope of Adjudication as per the Remand Order:
The petitioner claimed that the adjudicating authority exceeded the scope of the remand order issued by the Commissioner (Appeals-I) on 30.05.2019. The remand was limited to examining the refund of cess amounting to Rs.36,94,642/- and the issue of interest on the refund amount. However, the adjudicating authority issued a fresh show cause notice and broadened the scope, which included additional tax demands and penalties.

5. Accuracy of the Facts in the Show Cause Notice:
The petitioner argued that the impugned show cause notice was based on inaccurate facts, particularly regarding the payment of service tax amounting to Rs.2,40,03,002/-. The petitioner provided evidence that this amount had already been paid.

6. Refund of the Cess Amount and Interest Thereon:
The petitioner sought a refund of the excess service tax and cess paid. The court noted that the initial Order-in-Original dated 03.01.2019 had sanctioned a refund of Rs.2,32,09,285/- but denied the refund of Rs.36,94,642/- attributable to cess. The Commissioner (Appeals-I) had remanded the matter to address this issue. The court directed the respondent to refund the excess amount paid towards tax and cess amounting to Rs.36,27,615/- and to pay interest on the refunded amount at the rate of 6% per annum from 02.02.2018 to 03.01.2019.

7. Short Payment of Tax and Penalties Imposed:
The adjudicating authority, in the impugned order dated 30.06.2020, concluded that the petitioner had short-paid taxes amounting to Rs.2,15,39,257/- and Rs.1,03,05,282/-. Additionally, penalties were imposed for late filing of service tax returns. The court found that the adjudicating authority had reopened the entire assessment, which was beyond the scope of the remand order.

Conclusion:
The court found several procedural and substantive flaws in the adjudication process. It held that the adjudicating authority had exceeded its jurisdiction and failed to comply with procedural requirements, such as pre-show cause notice consultation and personal hearing. The court set aside the impugned order and directed the respondent to refund the excess amount paid towards tax and cess along with interest. The writ petition was allowed, and the respondent was ordered to comply with the court's directions within two weeks.