The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has come down heavily on the Central GST Department for withholding a portion of refund dues in violation of an appellate order that had already been accepted by the department.
The bench of Anil G. Shakkarwar (Technical Member) directed the immediate release of Rs. 15.13 lakh in refund—along with applicable interest—after it found that a Deputy Commissioner exceeded his jurisdiction by arbitrarily denying the amount, despite a clear and unchallenged ruling in favor of the assessee by the Commissioner (Appeals).
A refund application for accumulated Cenvat credit of Rs. 1.60 crore was initially rejected in 2018, citing Place of Provision of Services Rules, 2012. In May 2019, the Commissioner (Appeals) overturned this decision, ruling that the refund was indeed admissible. This order was accepted by the Revenue Department in September 2019. Despite the binding nature of that ruling, the refund sanctioning authority later disbursed only ₹1.51 crore and denied ₹15.13 lakh without any new legal basis. When the matter returned on appeal, the Commissioner (Appeals) inexplicably remanded the case instead of enforcing the prior ruling.
The Tribunal criticised the department’s conduct as “beyond jurisdiction” and described the Deputy Commissioner’s actions as a serious breach of procedure.
“If the department accepted the appellate order, it was duty-bound to implement it in full,” the Tribunal stated. It also warned that such procedural lapses erode the credibility of the adjudication system.
The Tribunal even considered recovering the applicable interest amount from the responsible officer’s salary—an unusual step that was ultimately not pursued, but indicative of the court’s displeasure.
The Tribunal allowed the appeal and directed the Revenue to refund Rs. 15.13 lakh with applicable interest from the date of expiry of three months after the refund application was originally filed.
Case Details
Case Title: Grindwell Norton Ltd. Versus Commissioner of CGST & CE, Mumbai East
Case No.: Service Tax Appeal No. 86872 of 2021
Date: 09.07.2025
Counsel For Appellant: Sachin Chitnis, Advocate
Counsel For Respondent: A.P. S. Parihar, Superintendent
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