In a recent case, the Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that adjustment of refund against a confirmed demand during the pendency of an appeal is not permissible as it amounts to coercive recovery.
M/s Indus Towers Limited, the appellant/assessee is registered with the Department of Telecommunication as a service provider for the provision of passive infrastructure support services to various telecom companies such as Vodafone, Bharti Airtel etc. The appellant had purchased various capital goods namely lead acid batteries, electric generator sets, air conditioners, power interface unit, Switch Mode Power Systems, battery banks etc and had availed CENVAT Credit of the excise duties paid thereon in terms of the Cenvat Credit Rules, 2004.
The appellant had filed a refund application dated 29.09.2022 before the Assistant Commissioner, CGST Division East-I, Gurugram for claiming the refund of Rs.12,00,00,000 deposited during the DGCEI investigation conducted against them in year 2014 alongwith applicable interest. The Assistant Commissioner partially sanctioned the refund to the appellant after adjusting the demand separately confirmed against erstwhile M/s Bharti Infratel Ltd and this demand was subsequently dropped.The Assistant Commissioner held that no interest was payable to the appellant as the refund claim of the appellant has been processed within three months of the receipt of CESTAT’s Order. The appellant received the refund of Rs.11,35,26,369.
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Not satisfied with the Order, the appellant filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) has held that 6% interest per annum is payable to the appellant, computable from the expiry of three months from the receipt of the CESTAT Order till the date of refund.
Read More: Cenvat Credit Can Be Utilised for Payment of Duty in Case of Delayed Excise Duty: CESTAT
The Commissioner (Appeals) has failed to provide any finding in respect of adjustment of the amount made by the Assistant Commissioner.Hence, the appeal has been preferred by the appellant claiming the interest on the amount of Rs.12,00,00,000 at the rate of 12% per annum from the date of deposit of such amount by the appellant till the actual date of payment of refund.
It was viewed that in the case of Sandvik Asia Limited vs. Commissioner of Income Tax the court has upheld the order of the Tribunal granting interest on refund to the assessee computable from the date of payment till the date of refund @12% per annum. The Tribunal held that the appellant is entitled to receive interest on the amount deposited during investigation from the date of deposit of the amount till the date of its refund at the rate of 12% per annum.
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Regarding the adjustment of the amount Rs.64,73,631/- from the total refund sanctioned to the appellant, the Adjudicating Authority has committed an error because the said demand was not confirmed by the Appellate Authority rather the said demand was set aside by the Appellate Authority in the case of Bharti Infratel Ltd.
The two member bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the amount adjusted from the total refund sanctioned to the appellant is refundable to the appellant at the rate of 12% per annum computed from the date of deposit till the date of its refund.
The tribunal allowed the appeal and held that the appellant is entitled to receive interest on the amount deposited during investigation from the date of deposit of the amount till the date of its refund at the rate of 12% per annum.
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