The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the law regulating the refund under section 11B of the Central Excise Act shall be paid within three months of making of the claim irrelevant of the merger of the Companies.
A three companies namely; i) M/s Adhunik Cement Ltd., ii) M/s DCB Power Ventures Ltd., and iii) M/s OCL India Ltd., are merged into M/s Dalmia Cement (Bharat) Limited (the merged company), w.e.f. 01.01.2015 as per the NCLT order. Accordingly, the appellant applied for refund on the service transaction, between the aforementioned companies, and was granted refund of Rs.14,99,680/- + Rs.81,25,805/- totalling Rs.96,25,485/-.
The Revenue determined 01.11.2018, being the date on which the order of merger of NCLT was produced before the Adjudicating Authority and denied the interest from the date prior to that.
On appeal, the Commissioner (Appeals) granted the interest by allowing the plea of the appellants. Hence, the Revenue approached the Tribunal on the ground that the Commissioner (Appeals) has erred in granting interest from the expiry of three months. According to the Revenue, prior to producing the order of NCLT before the Revenue Authority, different companies cannot be treated as one, or a single assessee. It was also argued that even if the refund application is made prior to the final order of NCLT, such application is not valid till that date, as the appellant was not legally single assessable unit. As the assessee have produced order granting merger, of NCLT before the Adjudicating Authority only on 01.11.2018, they are not entitled to interest prior to that date.
After considering the rival contentions, the Tribunal consisting Judicial Member Anil Chaudhary held that once the four companies have become one, by merger, under operation of law w.e.f. 01.01.2015, as per order of the competent Court, the transactions between them during the effective date and the date of order of the competent Court, partake the character of mutuality and hence are no longer taxable by operation of law.
“Whatever tax is deposited by different companies during the intervening period, ipso facto becomes “Revenue deposit”. On such Revenue deposit, interest has to be paid in terms of Section 11BB of the Act, from end of three months from the date of refund claim. Accordingly, I find that there is no error in the impugned order-in-appeal,” the Tribunal said.
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