Refund allowable if Service Tax paid in excess of the amount payable: CESTAT [Read Order]

The Principal Bench of the Delhi Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a refund is allowable if service tax is paid in excess of the amount payable.

Shri B L Yadav appeared on behalf of the Appellant and Shri Ishwar Charan appeared on behalf of the Respondent.

Capital Ispat ltd, the appellant engaged in the manufacture of MS Angle, channel, and flats.  A refund claim was filed by the appellant for Rs.17,38,023/- in respect of the interest deposited.  The appellant was issued a show cause notice which demanded the duty amounting to Rs.6,51,66,787/- alleging the evasion of Central Excise duty by way of suppression of receipt of raw material, of actual production leading to clandestineclearance of their final product.  

The appellant deposited Rs. 56,75,000/- voluntarily (Rs.15,00,000/- from the Cenvat Credit account and Rs. 41,75,000/-  as cash).  An application was filed before Settlement Commission New Delhi in terms of Section 32 E of the Central Excise Act, 1944 which was rejected and the matter was sent back to the Adjudicating Authority. 

The appellant also deposited Rs. 35,72,230/- inclusive of the amount of interest of Rs.17,38,023/-against their anticipated liability towards the demand of duty for Rs.6,51,66,787/- in the said show cause notice. The appellant applied to the order under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019(SVLDRS)Schemefor the resolution of a dispute initiated vide show cause notice.

The CESTAT bench of Dr Rachna Gupta, member(judicial) observed that the Adjudicating Authority has rejected the refund claim on the ground that the amount of interest cannot be called as tax dues in terms of section 123 of SVLDR Scheme / Finance Act, 2019 and same is otherwise not refundable in terms of proviso to section 124(2) and section 130 of the said Scheme/ Act.

It was acknowledged by the department that theamount of interest in addition to the amount of duty estimated under the SVLDR Scheme but still the refund has been rejected in terms of Section 124 (2) of the Finance Act, 2019.  

The CESTAT held that theimpugned amount was mandatory to be deducted from the amount of duty calculated to arrive at the estimated amount payable. When an amountis not requiredifdepositedand the amount is found more than the amount payable by the declarant, the same shall not be refunded. 

While allowing the appeal, the CESTAT held that the amount in question is eligible for a refund on merits as well as on account of limitation and set aside the impugned order. 

To Read the full text of the Order CLICK HERE

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