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2024 Supreme(Online)(CESTAT) 521
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P. K. Choudhary, J
Ms Advantek Fule Systems Pvt Ltd – Appellant
Versus
CE & CGST Ghaziabad – Respondent
E/70023/2022
Ms. Stuti Saggi, Advocate for the Appellant; Shri Sandeep Pandey, Authorized Representative for the Respondent
The department is legally obligated to refund the debited amount along with interest from the date of debit until the date of refund as per Section 35FF.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 35FF - Refund of amount paid under protest - Appellant entitled to interest on debited amount from the date of debit until refund - The department's insistence on re-debiting the amount does not negate the entitlement to interest. (Paras 3, 6, 7)
(B) Legal obligation - The department is under a legal obligation to refund the amount along with interest as per Section 35FF. (Para 3)
Facts of the case:
The appellant filed a refund claim after paying an amount under protest, which was initially debited due to departmental pressure. The amount was re-credited but later re-debited at the department's insistence.
Findings of Court:
The court found that the appellant is entitled to interest on the debited amount for the entire period it was retained by the department.
Issues: The main issue was whether the appellant is entitled to interest on the amount debited from the date of debit until the date of refund.
Ratio Decidendi: The court ruled that the appellant is entitled to interest on the debited amount for the entire period it was retained by the department, affirming the legal obligation under Section 35FF.
Result: Appeal allowed with consequential relief.
in Appeal No.
GZB/Excess/000/APPL/MRT/228/2018-19 dated 30.10.19 (decided both the appeals).
2.4 Pursuant to the said order in appeal, the appellant filed a refund claim with Dy. Commissioner CGST Div.-VII, GZB for refund of the amount already paid under protest.
2.5 On 13.02.2020 the Dy. Commissioner issued Show cause notice as to why the refund should not be rejected as appellants have debited the said amount from credit taken of Rs. 1,98,78,060/- on inputs which has been destroyed in fire that broke in factory on 09.01.2017.
2.6 Aforesaid SCN was adjudicated by Order-In-Original No. R- 14/DC/CGST/D-VII GZB/2020-21 and the Adjudicating Authority rejected the claim on the ground that utilization of the credit of 1SCN Rs. 41,28,105/- out of total amount Rs. 1,98,78,060/- involved in goods destroyed in fire is not proper.
2.7 Appeal was preferred against the said order in original dated 28/09/2020 before Commissioner (Appeals) who vide O-I- A No. GZB / Excise/000/APPL/MRT/14/2021-22 allowed the appeal with consequential relief.
2.8 In pursuance of O-I-A dated 30.04.2021,Appellant again filed refund application of Rs. 41,28,106 and Rs. 7586/- which was debited on 12.11.2014.
2.9 Ld. Assistant Commissioner CGST Div. - VII GZB vide Order-In-Original No. R-02/AC/CGST Div. VII/GZB/2020-21 Dated 30.06.2021 sanctioned the refund and sanctioned interest on the amount of Rs.7,586 for the period from 13.11.2014 to 17.06.2021 but interest payable on the other amount of Rs. 41,28,106/- was sanctioned for the period from 01.01.2017 to 17.06.2021 instead of 13.11.2014 to 17.06.2021.Therefore, there is a short payment of interest of Rs. 5,24,623/-. 2.10 An appeal was filed before the Ld. Commissioner (Appeals) whereby he upheld the Order-In-Original No.02/AC/CGST/DIV- VII/GZB/2020-21 and rejected the appeal observing as under:-
- 'I find that the appellant has suo-moto re- credited the amount in question in their CENVAT account on 31.02.2016 and has only finally paid amount of Rs. 30,78,106/- vide entry no. 78 dated 31.01.2017. Such suo-moto re-credit of the amount nullifies the debit entries dated 10.11.2014'.
2.11 Appellant is against the impugnrd Order-In-Appeal dated 15.11.2021 before this Tribunal.
2.12 The Appellant initially debited the amount of Rs.
41,28,106/- and that of Rs. 7,586/- under pressure from the department on 12.11.2014. When no order confirming any demand for the aforesaid amount was passed, they on facing financial crunch, took re-credit of the amount on 31.05.2016,but on objection from the department, again debited the same in two installments i.e. on 31.12.2016 and on 31.01.2017. They also deposited interest of Rs. 1,20,508/- vide GAR-7 challan no. 50189 dated 10.03.2017. 3 Learned Advocate Ms. Stuti Saggi appearing on behalf of the Appellant submitted that the Appellant are entitled to get inertest on the amount which was debited for the period debit entry continued. In this case the amount was debited on 12.11.2014 and continued to remain debited/paid upto 31.05.2016. This position has been admitted by the department also. It being so, the department is under legal obligation under section 35 FF to refund the amount alongwith interest from the date the amount was debited/pre-deposited till the date it was refunded. Since it was not done, the impugned Order-In-Appeal is not sustainable in law. The correct amount of interest to be payable as per them is as under:-
4 Learned Departmental Representative appearing on behalf of the Revenue has justified the impugned order.
5. Heard both sides and perused the appeal records.
6. I find that although the Appellant re-credited the amount of Rs. 41,28,106 debited on 12.11.2014, in their credit account on 31.05.2016, yet they again debited this amount in two installments i.e. Rs. 10,50,000 was debited vide RG-23A Pt-Il entry No. 61 dt.31.12.2016 and the remaining amount of Rs. 30,78,105 was debited vide Entry No. 78 dated 31.01.2017 of RG-23A Pt-II, at the insistence of the department. Th
