Order of Repayment of Refund from Exempted Service Erroneous as S.11B has no Provision to Recover Sanctioned Refunds: CESTAT Allows Appeal Partly [Read Order]
The tribunal relied on Mafatlal Industries v. Union of India and held that the order for rejection of refund cannot be sustained.
![Order of Repayment of Refund from Exempted Service Erroneous as S.11B has no Provision to Recover Sanctioned Refunds: CESTAT Allows Appeal Partly [Read Order]](https://images.taxscan.in/h-upload/2026/03/25/2130202-gst-refundjpg-1.webp "Order of Repayment of Refund from Exempted Service Erroneous as S.11B has no Provision to Recover Sanctioned Refunds: CESTAT Allows Appeal Partly [Read Order]")
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, partly allowed an appeal wherein it held that the order of repayment of refund from exempted service was erroneous as Section11B of the Central Excise Act, 1944 has no provision to recover sanctioned refunds. The appellant, Amarnath Sharma, had rendered services to the Military Engineering...
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, partly allowed an appeal wherein it held that the order of repayment of refund from exempted service was erroneous as Section11B of the Central Excise Act, 1944 has no provision to recover sanctioned refunds.
The appellant, Amarnath Sharma, had rendered services to the Military Engineering Services (MES). These services were exempted from service by Notification No. 25/2012-ST dated 20.06.2012 up to 01.04.2015 after which it was withdrawn. Again, it was exempted by Notification No. 6/2015-ST dated 01.03.2015.
Initially, the Assistant Commissioner had sanctioned refund of INR 2,50,131/- to the appellant and the amount was therefore paid to him. Later, the Assistant Commissioner, rejected the refund and directed the appellant to deposit the amount already paid to it. This was upheld by the Commissioner (Appeals).
The counsel for the appellant submitted that the concept of unjust enrichment under Section 11B as made applicable to the service tax by Section 83 of the Finance Act, 1944 will not apply where an amount is paid as tax which is not payable.
The opposing counsel for the Revenue submitted that Section 11B, unjust enrichment would apply to all cases of refund and there is a rebuttable presumption that the burden has been passed on to the customer or client.
The tribunal relied on Mafatlal Industries v. Union of India and held that the order for rejection of refund cannot be sustained. The bench additionally held that the amount should have instead been ordered to be credited to the Consumer Welfare Fund.
P. V. Subba Rao (Technical Member) finally held that the order upheld is not correct as the direction to repay the erroneous refund is concerned. The appeal was partly allowed.
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