Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 28TH DAY OF SEPTEMBER 2022 / 6TH ASWINA, 1944 C.E.APPEAL NO. 2 OF 2022 ST 20489/2021 OF CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE APPELLANT/S:
V.PETER AGED 80 YEARS PROPRIETOR, FAIRDEAL AGENCIES, VISWAMANDIRAM, CANTONMENT SOUTH, KOLLAM-691 001 BY ADVS.
K.SASIKUMAR S.ARAVIND P.S.RAGHUKUMAR RESPONDENT/S:
COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE GST BHAVAN, PRESS CLUB ROAD, THIRUVANANTHAPURAM- 695 001 OTHER PRESENT:
ADV . ANJANA PRADEEP FOR SR SC SREELAL WARRIER THIS CENTRAL EXICISE APPEAL HAVING COME UP FOR ADMISSION ON 28.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
C.E.APPEAL NO. 2 OF 2022 -2- S.V.BHATTI & BASANT BALAJI, JJ.
- - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - C.E.APPEAL NO. 2 OF 2022 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - JUDGMENT (Dated this the 28th day of September 2022) Basant Balaji J., Annexure A1 order of the CESTAT dated 25.3.2022 is impugned in this appeal.
2. The appellant is a Commission agent carrying on the business of buying and selling of cashew nut and cashew kernel. The appellant got registered with the Service Tax department under the category 'business auxiliary service' and was awarded registration and was payment of service tax with effect 1.2.2005. A show cause
C.E.APPEAL NO. 2 OF 2022 -3- No.58 of 2008 dated 15.12.2008 was issued to the appellant stating that the income earned as commission agent has not been correctly declared in the ST-3 returns during the year 2004-05 and demanded service tax for undeclared income for the said period. The demand was challenged before the Commissioner of Central Excise Appeal, Cochin, which was allowed and the order in original was set aside finding that raw cashew and cashew kernels are agricultural products and the demand of service tax is not maintainable as the commission received by the appellant was exempted from payment of service tax under notification No.13/2003-ST dated 20.6.2003 and later amended by notification No.8/2004.
C.E.APPEAL NO. 2 OF 2022 -4- 3. On the basis of the order of the appellate authority the appellant filed application for refund on 14.3.2016 claiming a refund of Rs.21,86,663/- paid as service tax for the period from October 2004 to September 2013. A show cause notice was issued to the appellant directing the appellant to show cause why the application for refund should not be rejected as time barred. Thereafter, the application for refund was rejected by the original authority vide order in original 3/2016-ST(REFUND) dated 8.6.2016 on the ground that the application was time barred.
Challenging the order in original rejecting the refund, an appeal was filed before the Commissioner of Appeals (Cochin). The appeal was rejected by order dated 9.7.2019 on the ground that limitation under section 11B of the
C.E.APPEAL NO. 2 OF 2022 -5- Central Excise Act was attracted and the claim was time barred. Later aggrieved by the order the appellant approached CESTAT Bangalore.
4. The CESTAT, after hearing both sides, held that the order of rejecting the refund as time barred is not sustainable in law. In view of the protest made by the appellant by letter dated 25.11.2005 and also on production of sufficient proof that they have not collected service tax from their recipients and therefore the question of unjust enrichment would not be applicable. Pursuant to the order of the CESTAT, a request for refund was made by the appellant before the Deputy Commissioner of Central Tax and Central Excise, Kollam Division by Annexure-A5
C.E.APPEAL NO. 2 OF 2022 -6- order and refund order was passed. But only service tax paid was refunded, without any interest.
5. The appellant, by letter dated 18.6.2020 requested to sanction interest for the amount paid by him as service tax. A Calculation statement with interest at the rate of 6% which worked out to Rs.14,17,928/- was also attached. The Commissioner of Central Tax and Central Excise, Kollam by letter dated 24.6.2020 informed that the refund was sanctioned within 3 months and hence, no interest was payable. Later by Annexure-A9 order, the Deputy Commissioner rejected the request for the appellant for interest on the ground that the refund was sanctioned within 3 months as per section 11B of the Central Excise Act. The
C.E.APPEAL NO. 2 OF 2022 -7- appellant took the matter before the Commissioner Appeals challenging the various orders passed by the Subordinate authorities rejecting claim for interest of service tax during period from October - December 2004 to July - September 2013. The Commissioner (Appeals) allowed the appeal and ordered to sanction interest for the period after 3 months from the date of which the appellant filed application for refund and not on date on which the appellant paid service tax to the government. Consequently an amount of Rs.5,16,532/- was sanctioned as interest.
Aggrieved by the order in original sanctioning the amount as interest, the appellant again approached CESTAT, Bangalore . The CESTAT, by the impugned order, held as follows:
C.E.APPEAL NO. 2 OF 2022 -8-
“5. By not specifically granting interest under Section 11BB ibid. the adjudicating authority has clearly ignored both directions of this Bench (supra) as well as Order-in-Appeal No. 291/2013 dated 21/11/2013 (supra) for which the Revenue has to answer, since, both the above orders have become final. Not following the order of a higher appellate authority amounts to judicial impropriety, especially when such order of a higher appellate authority has become final. In fact, the Ld.
Commissioner (A) while passing the impugned order should have specifically directed for granting interest as well as indicated by me in the above paragraph, but that having not done, therefore, to this extent the impugned order invites interference.
6. In view of the above, I am of the clear view that the appellant shall be entitled to the interest under Section 11BB ibid. from the date he got relief and became entitled to in his first appeal in the first round of litigation, i.e., OIA dated 21/11/2013. Impugned order to this extent is therefore set aside and the appeal is allowed on the above terms.”
6. The main contention raised by the counsel for the appellant is that the order passed by the CESTAT is illegal and denial of interest for the period from the date the
C.E.APPEAL NO. 2 OF 2022 -9- amounts were actually paid to the Government account, is bad. He contends that the interest has to be worked out from the date on which the appellant was compelled to pay service tax though he was exempted from paying service tax by notification. Therefore, according to the counsel for the petition the interest has to be worked out from 1.2.2005 to 3.5.2013.
7. The counsel for the respondent submits that it is as per Annexure-A2 order dated 21.11.13 that for the first time the contention of the appellant that he is not liable to pay service tax was declared and that only from that day onwards he can claim interest at the most. A perusal of Anneuxre-A2 shows that the main issue that was decided in
C.E.APPEAL NO. 2 OF 2022 -10- the appeal was the liability to pay service tax by the appellant on the Commission received by them for acting as commission agent for buying and selling of cashew nuts and cashew kernels. The Commissioner (Appeals) relying on the notification issued exempting payment of service tax allowed the appeal. It is on 21.11.2013 that the declaration is given that the appellant is not entitled to pay any service tax. Hence, any interest to be worked out on the refund has to be only from that day onwards. The appellant cannot contend that when a refund application is allowed, the interest has to be worked out from the date on which the service tax was actually paid into the Government. In fact Section 11BB and Section 11B of Central Excise Act 1944 deals with refund. It specifically states that the claim of
C.E.APPEAL NO. 2 OF 2022 -11- interest on refund liability of the revenue to pay interest commences from the date of expiry of the 3 months from the date of receipt application for refund under Section 11B(1) of the Act and not on the expiry of the period from the date on which the order of refund is made. The Tribunal by the impugned order has held that the liability to pay interest on the amount of refund starts from the date on which the declaration was made that the appellant is not liable to pay service tax and declared that the appellant is entitled for interest from the date of order in original dated 21.11.2013 onwards. On going through the order of the Tribunal, we are in full agreement that the appellant is entitled for interest on the refund made only from the date on which the original order was passed declaring that the
C.E.APPEAL NO. 2 OF 2022 -12- appellant is not liable to pay service tax. In view of the matter we are of the considered opinion that there arise no grounds for consideration in this appeal and accordingly, this Central Excise Appeal is dismissed.
sd S.V.BHATTI,
JUDGE sd BASANT BALAJI,
JUDGE dl/
C.E.APPEAL NO. 2 OF 2022 -13- APPENDIX OF C.E.APPEAL 2/2022 PETITIONER ANNEXURES Annexure A1 THE CERTIFIED COPY OF THE FINAL ORDER NO. A/20108/2022 DATED 25-03-2022 PASSED BY THE CESTAT IN APPEAL NO.
ST/20489/2011.
Annexure A2 A TRUE COPY OF THE ORDER-IN-APPEAL NO.
TVM-EXCUS-000-APP-033-13-14 DATED 21-11- 2013 ISSUED BY THE COMMISSIONER OF CENTRAL EXCISE (APPEALS), COCHIN - 18 Annexure A3 A TRUE COPY OF THE APPLICATION FOR REFUND DATED 14-3-2016 FILED BY THE APPELLANT Annexure A4 A TRUE COPY THE FINAL ORDER NO.
A/20068/2020 DATED 27-01-2020 PASSED BY THE CESTAT IN APPEAL NO. ST A NO.
20975/2019 Annexure A5 A TRUE COPY OF THE REFUND SANCTION ORDER NO. 01/2020 - 21 (DC) DATED 17-4-2020 PASSED BY THE DEPUTY COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, KOLLAM DIVISION Annexure A6 A TRUE COPY OF THE LETTER DATED 18-6- 2020 OF THE APPELLANT TO THE ASSISTANT COMMISSIONER OF CENTR TAX AND CENTRAL EXCISE, KOLLAM.
Annexure A7 A TRUE COPY OF THE LETTER C NO.
IV/16/09/2019TECH MISC DATED 24-06-2020.
C.E.APPEAL NO. 2 OF 2022 -14- Annexure A8 A TRUE COPY OF THE LETTER DATED 30-6- 2020.
Annexure A9 A TRUE COPY OF THE ORDER NO.
IV/10/04/2016 ST (REFUND) DATED 22-07- 2020 ISSUED BY THE DEPUTY COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, KOLLAM.
Annexure A10 A TRUE COPY OF THE APPEAL IN FORM ST4 FILED BEFORE THE COMMISSIONER OF CENTRAL EXCISE (APPEAL), COCHIN.
Annexure A11 A TRUE COPY OF THE ORDER-IN-APPEAL NO.
TVM-EXCUS-000-APP-416-2021 DATED 30-03- 2021 PASSED BY THE COMMISSIONER CENTRAL EXCISE (APPEALS), COCHIN.
Annexure A12 A TRUE COPY OF THE ORDER-IN-ORIGINAL NO.
01/2021-22 ST RFUND (DC) DATED 23-06- 2021 PASSED BY THE ASSISTANT COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, KOLLAM.
Annexure A13 A TRUE COPY OF THE APPEAL IN FORM ST-5 FILED BY THE APPELLANT BEFORE THE CESTAT BANGALORE