Commissioner Of Service Tax, Kolkata vs. Sourav Ganguly

Facts

The appeal was filed by the Revenue challenging an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated December 14, 2020. The CESTAT order directed the payment of interest on an amount deposited by the respondent, Sourab Ganguly, from the date of deposit with the government until its transfer to the Registrar General of the High Court. The dispute originated from a show cause notice issued in 2011 demanding service tax, interest, and penalty. The respondent had deposited Rs. 1,51,66,500/- and subsequently Rs. 50,00,000/-. The High Court, in earlier proceedings, had quashed the adjudication order and directed refund with interest. The Revenue appealed this, and the Division Bench directed the Revenue to deposit the amount with the Registrar General and the respondent to pre-deposit before the Tribunal. The CESTAT ultimately allowed the appeal, directing interest payment. The Revenue's appeal before the High Court questions the CESTAT's jurisdiction to grant this interest.

Held

The Court held that there was no substantial question of law arising for consideration in the appeal. Firstly, regarding the procedural delay in the Tribunal's judgment, the Court noted that the period of reservation coincided with the COVID-19 lockdown, and the Supreme Court had extended limitations. Therefore, the order could not be held non est. Secondly, concerning the grant of interest, the Court found that Section 11BB of the Central Excise Act empowers even lower authorities to grant interest on delayed refunds, implying such power vests with appellate authorities like the Tribunal. More importantly, the Court found that the right to interest was also established by a prior order of the High Court dated February 12, 2013, which explicitly stated that if the respondent succeeded, he would be entitled to refund with interest. This order bound the parties. The Court also noted that the High Court itself had quantified the interest at 10% in a subsequent order dated June 30, 2016. The Tribunal's direction to pay interest from the date of recovery till deposit with the Registrar General was deemed correct. Furthermore, the Court observed that the total interest sanctioned and refunded was Rs. 59,85,338/-, which fell below the monetary limit of Rs. 1 crore set by the CBIC for revenue appeals to the High Court, making the appeal liable to be non-suited on this ground as well. The appeal was accordingly dismissed.

Key Issues

1. Whether the learned Tribunal was right in entertaining a ground relating to the payment of interest on the entire amount deposited from the date of deposit with the Government till its transfer to the Registrar General, given that this ground was not part of the adjudication order examined by the Tribunal? (Section 73(1) of the Finance Act, 1994 and Section 35G of the Central Excise Act, 1944). 2. Whether the impugned order of the learned Tribunal directing payment of interest on the entire deposited amount is perverse and passed per incuriam? 3. Whether the impugned order of the learned Tribunal exceeded its jurisdiction by directing payment of interest, failing to appreciate a previous High Court Division Bench order dated August 14, 2019, which clarified no such interest was payable on the entire amount? Contentions: Petitioner (Revenue): Argued that the Tribunal's jurisdiction is limited to examining the Order-in-Original and that the issue of interest was not part of that adjudication. They also contended that the Tribunal's order was perverse and exceeded its jurisdiction, especially in light of a prior High Court order. The Revenue also raised a procedural issue regarding the delay in the Tribunal's judgment delivery, suggesting the order should be held non est. Respondent (Sourab Ganguly): Contended that the Tribunal was justified in granting interest. They relied on Supreme Court judgments to argue that delay in judgment delivery does not automatically render an order non est unless unreasonable. They also pointed out that the refund with interest had already been granted and paid, and that the right to interest stemmed from statutory provisions and prior High Court orders.