Claim Of Refund And Interest Shall Be Dealt Under The Existing Law On Central Excise And Not As Per CGST Act. Punjab & Haryana High Court Rejects The Plea Of Revenue
Parina Katyal
25 March 2022 6:34 PM IST
The Punjab and Haryana High Court has held that the revenue department cannot take the plea of transfer of jurisdiction due to GST regime against assessee's claim for refund of central excise duty and interest. The Bench, consisting of Justices Ajay Tewari and Pankaj Jain, ruled that the Income Tax Act, 1961 and Central Excise Act, 1944 are pari materia and an assessee was entitled...
The Punjab and Haryana High Court has held that the revenue department cannot take the plea of transfer of jurisdiction due to GST regime against assessee's claim for refund of central excise duty and interest.
The Bench, consisting of Justices Ajay Tewari and Pankaj Jain, ruled that the Income Tax Act, 1961 and Central Excise Act, 1944 are pari materia and an assessee was entitled to interest on delayed refund of central excise duty in light of the Supreme Court ruling in Sandvik Asia Ltd versus CIT, Pune (2006).
The Respondent/Assessee Riba Textiles Limited applied for refund of central excise duty along with interest before the Deputy Commissioner (Central Excise). The Deputy Commissioner allowed and sanctioned the refund of central excise duty to the Assessee however claim with respect to interest was rejected by it. The appeal filed by the Assessee against the order of the Deputy Commissioner was rejected by the Commissioner of Central Excise (Appeals). Against the order passed by the Commissioner of Central Excise (Appeals) the Assessee filed an appeal before the Customs, Excise & Services Tax Appellate Tribunal (CESTAT), Chandigarh. The CESTAT held that the Assessee was entitled to interest on delayed refund from the date of deposit till its realization.
The Assessee thereby approached the tax authorities for refund. While the application of the Assessee was pending before the authorities, the Commissioner of CGST and Central Excise filed an application before the CESTAT for rectification of mistakes which was dismissed by the CESTAT. The revenue department filed an appeal before the High Court against the order of the CESTAT.
The Counsel for the revenue department submitted before the High Court that after coming into force of Central oods and Services Tax Act, 2017 (CGST) there had been a change in the jurisdiction of tax authorities. The Counsel submitted that with effect from 22nd June, 2017 the erstwhile Central Excise and Customs Commissionerates were reorganised into Central Goods and Services Tax (Central Tax) Commissionerates. The Counsel thus contended that the Assessee had impleaded wrong authorities for claim of refund and interest.
The High Court ruled that Section 142 of the CGST Act which deals with miscellaneous transitional provisions explicitly provides that every claim of refund shall be dealt under the existing law i.e., Central Excise Act, 1944 and not by the provisions of the CGST Act. The High Court therefore held that the plea of transfer of jurisdiction due to GST regime was not available to the revenue department.
Also, the High Court noted that the Supreme Court in the case of Sandvik Asia Ltd versus CIT, Pune (2006) had laid down that an assessee was entitled to be compensated by the income tax department for delay in paying amounts due to the assessee under the Income Tax Act.
The High Court held that the provisions of Income Tax Act, 1961 and Central Excise Act, 1944 are pari materia, and therefore the law laid down by the Supreme Court in the case of Sandvik Asia Ltd. (2006) was applicable to the Assessee.
The High Court therefore dismissed the appeal of the revenue department and upheld the order of the CESTAT.
Case Title: Commissioner Of Central Excise, Panchkula Versus M/S Riba Textiles Limited
Citation: 2022 LiveLaw (PH) 46
Dated: 14.03.2022 (Punjab And Haryana High Court)
Counsel For The Appellant/Revenue Department: Mr. Sourah Goel, Senior Standing Counsel And Mr. Tej Bahadur.
