Adjustment Of Refund Against Confirmed Demand During Pendency Of Appeal Amounts To Coercive Recovery, Not Permissible: CESTAT

Date:

The Allahabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that adjustment of refund against a confirmed demand during the pendency of an appeal amounts to coercive recovery and is not permissible under the law.

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the amount adjusted from the total refund sanctioned to the appellant is refundable to the appellant at the rate of 12% per annum computed from the date of deposit till the date of its refund.

The appellant/assessee is registered with the Department of Telecommunication as a service provider for the provision of passive infrastructure support services to various telecom companies such as Vodafone, Bharti Airtel etc. 

For providing services, the appellant had purchased various capital goods namely lead acid batteries, electric generator sets, air conditioners, power interface unit, Switch Mode Power Systems, battery banks etc and had availed CENVAT Credit of the excise duties paid thereon in terms of the Cenvat Credit Rules, 2004.

Pursuant to the final order, the appellant had filed a refund application dated 29.09.2022 before the Assistant Commissioner, CGST Division East-I, Gurugram for claiming the refund of Rs.12,00,00,000 deposited during the DGCEI investigation conducted against them in year 2014 alongwith applicable interest. 

The Assistant Commissioner partially sanctioned the refund to the appellant after adjusting the demand separately confirmed against erstwhile M/s Bharti Infratel Ltd and this demand was subsequently dropped.

The Assistant Commissioner held that no interest was payable to the appellant as the refund claim of the appellant has been processed within three months of the receipt of CESTAT’s Order. The appellant received the refund of Rs.11,35,26,369.

Not satisfied with the Order, the appellant filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) has held that 6% interest per annum is payable to the appellant, computable from the expiry of three months from the receipt of the CESTAT Order till the date of refund.

The Commissioner (Appeals) has failed to provide any finding in respect of adjustment of the amount made by the Assistant Commissioner.

Hence, the appeal has been preferred by the appellant claiming the interest on the amount of Rs.12,00,00,000 at the rate of 12% per annum from the date of deposit of such amount by the appellant till the actual date of payment of refund. 

The tribunal allowed the appeal and held that the appellant is entitled to receive interest on the amount deposited during investigation from the date of deposit of the amount till the date of its refund at the rate of 12% per annum.

Read More: No Service Tax Payable On Free Allowance Given To Employees By Bharti Airtel: CESTAT

Case Details

Case Title: M/s Indus Towers Limited Versus Commissioner of Central Excise, Central Goods and Service Tax, Gurugram

Case No.: Service Tax Appeal No. 60744 of 2023

Date: 24.01.2025

Counsel For Appellant: Samyak Jain 

Counsel For Respondent: R. P. Sharma

Mariya Paliwala
Mariya Paliwalahttps://jurishour.in/
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

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