Orissa Manganese And Minerals Limited Through Its Authorized Signatory Niraj Kumar Gupta vs. Commissioner Central Goods And Service Tax And Central Excise

Facts

The petitioner, Orissa Manganese and Minerals Limited, had filed appeals before the CESTAT, Kolkata, against Orders-in-Original. In connection with these appeals, the petitioner made pre-deposits totalling Rs. 2,06,31,698/-. Subsequently, a petition under the Insolvency & Bankruptcy Code, 2016 (IBC) was admitted against the petitioner by the NCLT, Kolkata. The resolution professional notified the revenue to file its claims, but the revenue did not file any claim. The NCLT, Cuttack, later passed an order stating that the claims of the Revenue against the petitioner could not be entertained. Following this, the CESTAT dismissed the petitioner's appeals as withdrawn. The petitioner then sought a refund of the pre-deposit amount, which was rejected by the Deputy Commissioner, CGST & CX, Jamshedpur, vide an order dated 25.04.2023.

Held

The Court held that the impugned order dated 25.04.2023 passed by Respondent No. 2 is quashed and set aside. The Court found that the Revenue had misconstrued the orders passed by the NCLT. The NCLT's order stating that no claims could be entertained applied to the Revenue's claims against the petitioner, not to the petitioner's right to a refund of pre-deposit. The Court emphasized that the tax liability itself had stood extinguished due to the IBC proceedings, and retaining the pre-deposit would amount to unjust enrichment. The Court also noted that the Revenue had not filed any claims during the IBC process, nor had they challenged the NCLT orders, which had attained finality. The Court distinguished the cited Supreme Court judgments (Rainbow Papers and Sanjay Kumar Agarwal) as being on different facts where the Revenue had actively participated in the IBC process. The Court directed the Respondent-Revenue to refund the pre-deposit amount of Rs. 2,06,31,698/- to the petitioner along with applicable statutory interest within six weeks. The Court also found the Circular No. 984/08/2014-CX inapplicable as it predated the IBC and was not referenced in the impugned order.

Key Issues

1. Whether the rejection of the petitioner's refund application for the pre-deposit amount of Rs. 2,06,31,698/- by the Respondent No. 2, vide order dated 25.04.2023, is legally sustainable, considering the extinguishment of the Revenue's claims against the petitioner under the Insolvency & Bankruptcy Code, 2016? (Question of law) Petitioner's arguments: The petitioner contended that the Respondent No. 2 misconstrued the proceedings under the IBC and the orders passed by the NCLT. They argued that the extinguishment of the Revenue's claim against the petitioner under the IBC does not bar the refund of the pre-deposit, especially since the underlying tax liability itself has been extinguished. They relied on the Supreme Court judgments in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edifice Properties LLP and M/s Ruchi Soya Industries v. Union of India, and a High Court judgment in M/s ESL Steel Limited v. Principal Commissioner, CGST & CX. Revenue's arguments: The respondent argued that the refund application was examined in light of Circular No. 984/08/2014-CX. They contended that refund with interest is payable only when the appeal is decided in favour of the assessee. Since the CESTAT dismissed the appeals as 'withdrawn' and not in favour of the petitioner, the refund claim cannot be entertained. They relied on the principle that pre-deposit is not payment of duty and thus not subject to refund under Section 11B of the Central Excise Act, 1944, and cited State Tax Officer v. Rainbow Papers Ltd. and Sanjay Kumar Agarwal v. State Tax Officer.