S. 11A(1) Of Central Excise Act Authorises Officer To Recover Any Duty Of Excise Besides Others Being Erroneously Refunded: Sikkim HC

The Sikkim High Court observed that Section 11A(1) of the Central Excise Act, 1944 authorises the Central Excise Officer to recover any duty of excise, besides others, which has been erroneously refunded.

The Court observed thus in a tax appeal filed by the Commissioner of Central Goods and Services Tax and Central Excise against the order of the Customs, Excise and Service Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata.

A Division Bench comprising Chief Justice Biswanath Somadder and Justice Meenakshi Madan Rai said, “A plain reading of section 11A, as quoted hereinabove, reveals that it makes a distinction between the cases of duties of excise not having been levied, paid, short-paid or short-levied, erroneously refunded, for reasons of fraud, collusion or any mis-statement or suppression of facts or contravention of any provisions of the Act or Rules made with the intent to evade payment of duty and in cases where none of these elements are present, under sub-section (1) of section 11A of the Act of 1944, where any such duty of excise has not been levied or short-levied or erroneously refunded for any reason other than the reasons of fraud or collusion, etc., the Central Excise Officer would, within two years from the relevant date, serve a notice on the person chargeable to the duty calling upon him to show cause why the amount specified in the notice along with interest not be recovered. Sub-section (1) of section 11A thus authorises the Central Excise Officer to recover any duty of excise, besides others, which has been erroneously refunded. It is in this context that the term “erroneously refunded” assumes significance.”

Deputy Solicitor General of India (DSGI) Sangita Pradhan represented the appellant while Advocate Mahesh Raichandani represented the respondent.

In this case, the appeal was preferred by the Commissioner under Section 35G of the 1944 Act. It was submitted by the DSGI for the appellant that the decision of the Supreme Court which sanctioned the refund claims of the respondent being the case of M/s SRD Nutrients Private Limited v. Commissioner of Central Excise, Guwahati (2018) was subsequently overruled in the case of M/s Unicorn Industries v. Union of India (2020). It was further submitted that the powers of the concerned authority to invoke the provisions of Section 11A of the Act, for recovery of duty erroneously refunded, would have been very much permissible in this case. When asked by the High Court as to when the M/s Unicorn Industries judgment came into force, the it was submitted that the same came into force at a subsequent date, that is, after the refund claims were sanctioned by the competent authority. Therefore, the question that arose before the Court for consideration was:

“Whether the subsequent judgment of the Supreme Court rendered in M/s Unicorn Industries overruling the judgment of M/s SRD Nutrients will be applicable in the facts of the instant case?”

The High Court in view of the above question, noted, “The learned Tribunal proceeded to observe to the effect that the Excise Officer had no other choice but to follow the decision of the Hon’ble Supreme Court in M/s SRD Nutrients (supra). Any other action on his part would have been wholly illegal. His order of refund thus was in consonance with the law declared by the Hon’ble Supreme Court at the time when he was passing the order. The learned Tribunal proceeded further to observe that in its view any subsequent change in the legal position would not permit him to invoke the powers of section 11A of the Act of 1944.”

The Court added that, all legal proceedings on the date when are being decided by any Court, would be governed by the law laid down by the Supreme Court which prevails on such date.

Before parting with the matter, the Court remarked that the appeal filed in this case is a classic example of an instance where precious and valuable time of the Court is lost because of the appellant choosing not to follow the law laid down by the Supreme Court which governs the field.

“… ignoring the said decision of the Hon’ble Supreme Court, a frivolous appeal has been filed. We, therefore, find that this is a fit case for imposition of cost upon the appellant. As such, this Court imposes a cost of Rs.20,000/- (Rupees twenty thousand only) upon the appellant which shall be deposited with the Sikkim State Legal Services Authority within a fortnight from date”, it further directed.

However, on request of the DSGI for exemption in payment of the aforesaid cost with an assurance, the Court refrained from imposing the cost upon the appellant.

Accordingly, the High Court dismissed the appeal.

Cause Title- Commissioner of Central Goods and Services Tax and Central Excise v. M/s Alkem Laboratories Ltd. (Neutral Citation: 2024:SHC:108)

Appearance:

Appellant: DSGI Sangita Pradhan and Advocate Natasha Pradhan.

Respondent: Advocates Mahesh Raichandani and Ranjit Prasad.

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