The Sikkim High Court recently held that cess priorly refunded cannot be recovered in light of change in law owing to an overruling decision passed by the Supreme Court while warning the Central Goods and Services Tax Commissioner (CGST) of cost of Rs.20,000/- for initiating baseless matters before the Court.
The Tax Appeal was filed before the High Court of Sikkim at Gangtok by the Commissioner of Central Goods and Services Tax and Central Excise, Siliguri, West Bengal against the order of the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (CESTAT) in two excise appeals contested by Alkem Laboratories Ltd., an India-based manufacturer and seller of pharmaceutical generics, formulations and nutraceuticals, represented by Mahesh Raichandani and Ranjit Prasad,.
Sangita Pradhan, Deputy Solicitor General of India assisted by Natasha Pradhan appearing for the appellant Commissioner has preferred this Appeal in light of the decision given by the Supreme Court of India in the case of M/s Unicorn Industries vs. Union of India and Others (2020) overruling the legal basis of M/s SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati (2018) regarding the sanction of refund claims.
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Deputy Solicitor General of India submitted that such overrule would vest additional powers on the authority to invoke the provisions of Section 11A of the Central Excise Act, 1944 for recovery of duty erroneously refunded.
The two-member Bench of the Sikkim High Court constituted by Chief Justice Biswanath Somadder and Justice Meenakshi Madan Rai observed that a plain reading of Section 11A of the Central Excise Act, 1944 Central Excise Officer to recover any duty of excise, besides others, which has been erroneously refunded, and gauged the significance of the term “erroneously refunded” in the present context.
The High Court held that the Excise Officer had accurately passed the Order laying down the then-existent law in light of the Apex Court’s decision in SRD Nutrients and that any subsequent change in the law would not permit the Excise Officer to invoke revisionary powers to reopen a closed matter.
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Additionally, the High Court held that if the Appellant Counsel’s contentions were to be accepted, it would result in complete chaos with lack of finality. Concludingly, the Sikkim High Court firmly reprimanded the Revenue for approaching the Court with a frivolous appeal leading to wastage of precious time, ignoring precedential matters and thereby imposed a cost of Rs.20,000/- on the Appellant, which was later undone on prayer by the Deputy Solicitor General of India
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