Adjustment Of Refund Against Confirmed Demand During Pendency Of Appeal Amounts To Coercive Recovery: CESTAT

The amount adjusted from the total refund sanctioned to the assessee is refundable to the assessee at the rate of 12% per annum computed from the date of deposit till the date of its refund, stated the bench.

Regarding the adjustment of the amount from the total refund sanctioned to the assessee, the bench of S.S. Garg (Judicial) and P. Anjani Kumar (Technical) found that 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 this case, the assessee/appellant is registered with the Department of Telecommunication as a service provider for the provision of passive infrastructure support services to various telecom companies. In year 2014, investigation proceedings were initiated by the DGCEI and the assessee, without admitting liability, deposited an amount of Rs.12,00,00,000/-.

Pursuant to the final order, the assessee had filed a refund application before the Assistant Commissioner, for claiming the refund of Rs.12,00,00,000/- deposited during the DGCEI investigation.

The Assistant Commissioner partially sanctioned the refund to the assessee after adjusting the demand separately confirmed against erstwhile M/s Bharti Infratel Ltd. (another case) and this demand was subsequently dropped. Further, the Assistant Commissioner held that no interest was payable to the assessee as the refund claim of the assessee has been processed within three months of the receipt of CESTAT's Order.

Not satisfied by the decision of Assistant Commissioner the assessee filed an appeal to the Commissioner (Appeals), CGST, Gurugram

The Commissioner (Appeals) held that interest @6% per annum is payable to the assessee, computable from the expiry of three months from the receipt of the CESTAT Order till the date of refund. Further, the Commissioner (Appeals) failed to provide any finding in respect of adjustment of the amount made by the Assistant Commissioner.

The assessee has challenged the order passed by the Commissioner (Appeals), CGST, Gurugram. before the Tribunal.

The revenue submitted that a clarification is provided by the CBEC by way of the Circular dated 16.09.2014 as per which the amount paid/deposited by an assessee during the investigation will also be treated as pre-deposit for the purpose of Section 35F. The assessee has availed the benefit of clarification extended by the CBEC and the condition of pre-deposit was satisfied by adjusting the amount of Rs.12,00,00,000/- paid during investigation.

The bench stated that the assessee 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.

Further, adjustment of demand confirmed by the Bharti Order against the refund due to the assessee could not have been made prior to the Bharti Order attaining finality. Further, the demand confirmed against Bharti Infratel Ltd. was subsequently dropped, noted the bench.

In view of the above, the bench allowed the appeal.

Case Title: M/s Indus Towers Limited v. Commissioner of Central Excise, Central Goods and Service Tax, Gurugram

Case Number: Service Tax Appeal No. 60744 of 2023

Counsel for Petitioner/ Assessee: Samyak Jain and Yas Varmani

Counsel for Respondent/ Department: R. P. Sharma