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2025 (4) TMI 761 - HC - Central ExciseChallenge to impugned recovery notice - demanding repayment of an erroneously refunded amount under Section 11A and Section 11AA of the Central Excise Act 1944 - entitlement to a special rate/value addition as per the Notifications dated 27.03.2008 and 10.06.2008 - HELD THAT - Having perused the order dated 24.03.2021 passed in M/s. Jyothi Labs Ltd. 2021 (3) TMI 1039 - GAUHATI HIGH COURT it is seen that issue involved in that case and in the present case appears to be similar on facts and law with only a difference that in that case the special rate application was filed before the appropriate authority and in the present case the petitioner filed the special rate application before the Regional Officer although addressed to the Principal Commissioner Central Goods Services Tax Guwahati. As agreed to by the learned counsel for the parties the petitioner is directed to file special rate/value addition application claiming special rate/value addition before the Principal Commissioner Central Goods Services Tax Guwahati within a period of fifteen (15) days from today. On receipt of such application by the petitioner as directed herein above the Principal Commissioner Central Goods Services Tax Guwahati to consider the application. After arriving at the special rate if any as per the order to be passed by the Principal Commissioner Central Goods Services Tax Guwahati further process against the petitioner as per law may be initiated. Conclusion - The petitioner is entitled to file a special rate/value addition application which must be considered by the Principal Commissioner Central Goods Services Tax Guwahati. Petition disposed off.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of the Recovery Notice: The recovery notice was issued under Section 11A and Section 11AA of the Central Excise Act, 1944, demanding repayment of a refunded amount. The petitioner argued that the refund was not erroneous and that the notice should be set aside. The Court considered the relevant legal framework, including the provisions under which the refund was initially granted and the subsequent demand for recovery. The Court noted that the refund was initially granted based on a Supreme Court order and subsequent notifications, which were later upheld. The Court's interpretation emphasized that the refund was not erroneous per se, but contingent on the outcome of the special rate application. 2. Entitlement to Special Rate/Value Addition: The petitioner claimed entitlement to a special rate/value addition under Notifications dated 27.03.2008 and 10.06.2008, which the Supreme Court upheld. The Court examined these notifications and the Supreme Court's judgment, which validated the provisions for value addition and did not violate promissory estoppel principles. The Court reasoned that the petitioner's entitlement to a special rate could potentially negate the recovery notice if the application for value addition was favorably considered. The legal framework allowed manufacturers to apply for a special rate if their actual value addition exceeded specified rates. 3. Filing and Consideration of Special Rate Application: The petitioner contended that an application for special rate/value addition was filed but not considered by the authorities. The respondent argued that no such application was filed with the competent authority. The Court analyzed the evidence, including affidavits and application copies, to determine whether the application was appropriately filed. The Court found discrepancies in the petitioner's statements regarding the filing of the application. However, it directed the petitioner to file the application with the Principal Commissioner, Central Goods & Services Tax, Guwahati, for proper consideration. 4. Principles of Natural Justice: The petitioner argued that the recovery notice violated principles of natural justice, as it was issued without considering the special rate application. The Court acknowledged this argument, noting that the respondent authorities should have considered the application before proceeding with recovery actions. The Court emphasized that until the special rate application was decided, no coercive action should be taken against the petitioner, thereby upholding the principles of natural justice. SIGNIFICANT HOLDINGS The Court made several significant determinations:
The Court concluded that the petitioner's case was covered by the precedent set in M/s. Jyothi Labs Ltd., and thus, the petitioner was entitled to relief, provided the application for special rate was duly filed and considered. The writ petition was disposed of with these observations and directions.
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