Adjustment of Rebate Against Unfinalized Demand Not Permissible: CESTAT [Read Order]

The Ahmedabad Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT) held that adjustment of rebate against an unfinalized demand is not permissible.

UPL Limited,appellant-assessee, challenged an order where the department adjusted a rebate claim against a demand. The department did this suo moto, even though the appellant had appealed the demand to the Commissioner (Appeals) and then to the Revisionary Authority (RA), which remanded the matter to the adjudicating authority.

The assessee argued that there was no confirmed demand, as the issue was still under review by the competent authority. They referred to a case, M/s. National Engineering Industries Ltd vs. CGST Jaipur (2019), where it was ruled that the department could not recover a sum unless it was confirmed as payable. The assessee stated that since the demand had not been finalized and was under adjudication, the department couldn’t adjust the refund.

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The department’s representative, however, cited several cases to argue that the department could adjust the refund against a confirmed demand.

The department argued that filing an appeal doesn’t stay the demand, so the refund could be adjusted. However, the advocate countered that the Revisionary Authority's (RA) remand was an open remand, which wasn’t considered in the cited cases. The advocate pointed to paragraph 13 of the RA's order, which set aside the earlier order and remanded the case to the original adjudicating authority.

The key point was that when an order is set aside and remanded, no demand exists at that time.

Read More: Adjustment of Refund against Confirmed Demand During Pendency of Appeal is not Permissible: CESTAT

A single member bench of Somesh Arora(Judicial Member) after considering both sides, agreed with the advocate and concluded that since the order was set aside by the RA, no demand existed. The bench therefore decided to set aside the order adjusting the rebate against the demand.

In short,the appeal was allowed.

To Read the full text of the Order CLICK HERE

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