Commissioner Of Central Tax, CGST, Delhi East vs. Batra Henlay Cables

Held

The Court dismissed the application for recall of the order dated August 24, 2022. The Court held that the monetary limits prescribed by the CBIC for filing appeals to the High Court are applicable to cases involving interest on amounts ordered to be refunded. This interpretation was based on a bare perusal of paragraph 1.2 and paragraph 1.4 (Issue no. 1) of the CBIC circular dated August 17, 2011. The circular explicitly clarifies that monetary limits apply to cases of refund. The Court agreed with the Respondent's submission that the aspect concerning interest payable on refund is covered by the circular. Consequently, since the original appeal was closed on the ground of the tax effect being below the prescribed monetary limit, and this principle extends to interest on refunds, the recall application was not maintainable. The Court noted that the Board had also declined to file an SLP against the order closing the appeal, citing monetary grounds, which further reinforced the decision.

Facts

The Commissioner of Central Tax, CGST, Delhi East (Appellant) filed an application seeking recall of a previous order dated August 24, 2022, by which their appeal was closed. The appeal was closed because the tax effect was below the threshold limit of Rs. 1,00,00,000/- prescribed by the Central Board of Indirect Taxes and Customs (CBIC) for filing appeals to the High Court. The dispute pertains to interest on an amount ordered to be refunded to Batra Henlay Cables (Respondent). The Respondent had deposited Rs. 25,00,000/- during investigation, which was later confirmed as a demand. However, the CESTAT set aside the duty demand and penalty, leading to the Respondent claiming refund of the deposited amount along with interest. The adjudicating authority sanctioned the refund but not the interest. The Commissioner (Appeals-I) partially allowed the appeal granting interest. The CESTAT, in its order dated July 12, 2021, directed interest payment from the date of deposit till the date of remittance, at 12% per annum. The Appellant's appeal against this CESTAT order was initially closed due to the tax effect being below the monetary limit.

Key Issues

1. Whether the monetary limits prescribed by the CBIC for filing appeals to the High Court apply to cases involving interest on amounts ordered to be refunded. Petitioner's Arguments: The Appellant argued that the circular prescribing monetary limits for appeals would not apply to matters concerning interest on amounts ordered to be refunded. They sought recall of the order closing the appeal, acknowledging that the tax effect was initially below the threshold. Respondent's Arguments: The Respondent contended that the monetary limits prescribed by the CBIC do apply to cases of refund, including the interest component. They relied on paragraph 1.2 and paragraph 1.4 (Issue no. 1) of the CBIC circular dated August 17, 2011, to support their argument that interest on refunds is covered by the monetary limits. The Board's subsequent decision not to file a Special Leave Petition (SLP) further supported the Respondent's position.