Rawmin Mining and Industries Pvt Ltd V. Union of India

SCA/13222/2018

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The case involves M/S Rawmin Mining and Industries Pvt Ltd, the petitioner, who sought a writ of mandamus under Article 226 of the Constitution of India against the Union of India, the respondent, for the payment of interest on a delayed refund of service tax paid on services used for the export of goods. The petitioner had initially filed refund claims which were partially allowed by the Commissioner (Appeals) and fully allowed by the Appellate Tribunal. However, the refund was paid without interest, leading the petitioner to seek judicial intervention for the payment of interest on the delayed refund. The court examined the provisions of Section 11BB of the Central Excise Act and previous rulings to determine the entitlement of the petitioner to interest on the delayed refund.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 811941 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 14-02-2019
• Assessment Year: misc
• Other Referred Cases: Kamakshi Tradexim (India) Pvt. Ltd. Vs. UOI, Purnima Advertising Agency Pvt. Ltd. Vs. UOI, Ranbaxy Laboratories Ltd. Vs. UOI, Afrique Tradelinks Pvt. Ltd. Vs. UOI, C.C. Air Port & ACC, Bangalore Vs. Pfizer Products India Pvt. Ltd., J.K. Cement Works Vs. Asstt. Commissioner of Central Excise & Customs, Special Civil Application No.12713 of 2014, Commissioner of Income Tax and others Vs. Chhabil Das Agarwal, Shahakari Khand Udyog Mandal Ltd. Vs. Commissioner of Central Excise & Customs, Padmanabh Silk Mills Vs. Union of India, Special Civil Application No.3780 of 2004, Super Cassettes Indus. Ltd. Vs. Commissioner of C. Ex.
• Laws Referred To: Article 226 of the Constitution of India, Central Excise Act, Section 11BB of the Central Excise Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DEVANG VYAS; SWAPNESHWAR GAUTAM
• Assessee Lawyers: AMAL DAVE; PARESH DAVE
• Keywords: Export of goods; Interest on delayed payment; Refund of service tax; Writ of Mandamus
• Section: 11BB

Judgement Text

"C/SCA/13222/2018 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13222 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT and HONOURABLE MR.JUSTICE A.G.URAIZEE =============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? =============================================================== M/S RAWMIN MINING AND INDUSTRIES PVT LTD Versus UNION OF INDIA ================================================================ Appearance: AMAL PARESH DAVE(8961) for the PETITIONER(s) No. 1,2 MR PARESH M DAVE(260) for the PETITIONER(s) No. 1,2 MR DEVANG VYAS(2794) for the RESPONDENT(s) No. 1 SWAPNESHWAR GAUTAM(9051) for the RESPONDENT(s) No. 2 =============================================================== CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT and HONOURABLE MR.JUSTICE A.G.URAIZEE Date : 14/02/2019 ORAL JUDGMENT Page 1 of 9 C/SCA/13222/2018 JUDGMENT (PER : HONOURABLE MR.JUSTICE A.G.URAIZEE) 1. Rule. Mr. Devang Vyas, learned counsel waives service of Rule on behalf of the respondent No.1 and Mr.Swapneshwar Gautam, learned counsel waives service of Rule on behalf of the respondent No.2. 2. The controversy involved in this petition moves in a narrow compass, hence, the petition is taken up for final disposal with the consent of learned counsels for the parties. 3. The petitioner has preferred this petition under Article 226 of the Constitution of India for the following reliefs: “(A) Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ order or direction thereby setting aside decision of the 2nd Respondent conveyed by Letter No.V/1801/Misc./Ref-Reb/2014015 dated 2.8.2018 (Annexure- “H”) and directing the second Respondent herein to sanction and pay the Petitioners' claim and request for interest on delayed payment of refund of Rs.32,26,804 in accordance with law; (B) That Your Lordships may be pleased to issue a Witt of Mandamus or any other appropriate writ, order or direction thereby directions the second Respondent herein to pay to the Petitioner Company, interest on delayed refund of Rs.32,26,804/- for the period from 13.9.2016 to 12.7.2018 under Section 11BB of the Central Excise Act: (C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the second Respondent herein to pay forthwith in favour of the Petitioner Company interest on delayed payment of refund of Rs.32,26,804/- for the period from 13.9.2016 to 12.7.2018 on the terms and condition that may be deemed fit by Page 2 of 9 C/SCA/13222/2018 JUDGMENT this Hon'ble Court; (E) An ex parte ad-interim relief in terms of para 20(C) above may kindly be granted. “ 4. Facts in brief could be culled out from the memo of petition and connected materials are that: 4.1 The petitioner is a Private Limited Company and is a manufacturer-cum-merchant exporter of products like Bauxite. The petitioner is availing service in nature of Sample Analysis Service, Port Service, Labour and Manpower Service etc. for export of its goods and such services are taxable services attracting levy of Service Tax under the provisions of Finance Act, 1994. The petitioner has accordingly borne liability of Service Tax on the service which has availed in nature of Sample Analysis Service, Port Analysis etc. 4.2 The Central Government by Notification No. 41/2007-ST dated 06.07.2007 exempted the Service Tax payable of various services specified in Notification, if such services are used for the purpose of export of goods. The benefit of Notification is implemented by allowing the refund to the exporter who has availed the taxable services on submissions of various documents contemplated by the Notification. The petitioner, therefore lodged three Refund claims with the respondent No.2 on 13.06.2016 for Rs.8,34,314/-, Rs.11,65,756/- and Rs.14,63,568/-. These refund claims came to be denied by the respondent No.2 by passing three Orders in Original (OIO) on 08.09.2016. 4.3 The petitioner therefore, was constrained to prefer three separate appeal by commissioner (Appeals) Rajkot, who decided these appeals by common OIA No.BHV-EXCUS-000- Page 3 of 9 C/SCA/13222/2018 JUDGMENT APP-059 to 61-2017-18 dated 01.11.2017 and refund claim was partially allowed. 4.4 The petitioner being unhappy with the partially refund claim, preferred three appeals before the Appellate Tribunal, Ahmedabad. The appeals were heard together and they were allowed by the Tribunal with consequential relief as per the law, vide order dated 25.05.2018. Thus, refund claim of the petitioner came to be allowed in toto. 4.5 The petitioner after receipt of order of the Tribunal, submitted formal letter dated 12.06.2018 requesting the respondent No.2 to pay refund with interest. The respondent No.2 thereafter, passed order being OIO No.REFUND/15/AC.JND /2018-19 dated 12.07.2018 and sanctioned the refund aggregating to Rs.32,26,804/-. 5. We have heard Mr. Paresh M. Dave, learned advocate for the petitioners and Mr. Swapneshwar Gautam, learned advocate for the respondents. 6. Mr. Dave, learned advocate for the petitioners submitted that the Central Government by Notification No.41/2007-ST dated 06.10.2007 allowed exemption to the service tax on various services indicated in the Notification when the goods is used in relation to export. He further submitted that exemption under the said Notification is implemented by allowing the refund to the exporters, who have availed taxable service subject to submissions on various documents specified in the Notification. It is his further submission that the petitioners availed various services in respect of export of goods and the tax was paid by the service provider. He submitted that the Page 4 of 9 C/SCA/13222/2018 JUDGMENT service provider, whose services were availed by the petitioner was included in the aforesaid Notification. The petitioner therefore, lodged three Refund claims with the respondent No.2 herein. All the three claims were rejected by the respondent No.2 on 08.09.2016 by three different orders of even date. The decision of the respondent No.2 rejecting the claims was challenged before the Commissioner (Appeal), Rajkot, by preferring three separate appeals, which are decided by common order dated 01.11.2016 and the refund claims of the petitioner are partially allowed. He submitted that the petitioners were aggrieved by the said order of Commissioner (Appeals), Rajkot, allowing the refund claims partially challenged before the Appellate Tribunal, who have allowed the appeals with consequential relief. The petitioners thereafter, submitted a letter dated 12.06.2018 requesting the respondent No.2 to pay the refund with interest in light of final order of the Appellate Tribunal. The respondent No.2 thereafter, sanctioned a total sum of Rs. 32,26,804/- towards refund without interest by order dated 12.07.2018. Since the original refund claims were lodged on 13.06.2016, the refund was paid after two years i.e. on 12.07.2018. The petitioner by letter dated 17.07.2018 requested the respondent No.2 to pay interest under Section 11BB of the Central Excise Act on delayed payment, which is refused by the respondent No.2 by communication dated 02.08.2018. He submitted that the issue involved in the appeal is no longer res integra. 7. In support of the above submissions, learned advocate Mr. Dave has relied upon following decisions: (i) Kamakshi Tradexim (India) Pvt. Ltd. Vs. UOI reported in 2017 (3) E.L.T.102 (Guj.) Page 5 of 9 C/SCA/13222/2018 JUDGMENT (ii) Purnima Advertising Agency Pvt. Ltd. V/s. UOI reported in 2016(42) S.T.R. 785 (Guj.) (iii) Ranbaxy Laboratories Ltd. Vs. UOI reported in 2011 (273) E.L.T. 3 (S.C.) (iv) Afrique Tradelinks Pvt. Ltd. Vs. UOI reported in 2004(61) RLT 726 (Guj.) (v) C.C. Air Port & ACC, Bangalore Vs. Pfizer Products India Pvt. Ltd. reported in 2015(324) E.LT. 259 (Karn.) (vi) J.K. Cement Works Vs. Asstt. Commissioner of Central Excise & Customs reported in 2004 (170) E.L.T. 4 (Raj.) (vii) Special Civil Application No.12713 of 2014 dated 09.10.2014 of this Court. 8. Mr. Dave, learned advocate, therefore, prayed that the petition may be allowed and the respondents may be directed to pay the interest on the delayed payment from 13.06.2016 when the refund claim was originally lodged by the petitioner. 9. Mr. Gautam, learned advocate for the respondents has vehemently opposed this petition. He submitted that alternative remedy is available to the petitioners and therefore, present petition is not maintainable. In respect of this submission, reliance placed on the decision of Commissioner of Income Tax and others Vs. Chhabil Das Agarwal reported in (2014) 1 Supreme Court Cases 603. Page 6 of 9 C/SCA/13222/2018 JUDGMENT 10. Mr. Gautam, learned advocate submitted that immediately on receipt of letter dated 12.06.2018, the refund application was promptly processed by the respondent No.2 and refund is paid on 12.07.2018. It is his further submission that allowing the interest from the date of the original claim application lodged before the respondent No.2 would amount to illegal enrichment by the petitioner, which is not permissible. In support of this submission, reliance is placed on the decision of Shahakari Khand Udyog Mandal Ltd. Vs. Commissioner of Central Excise & Customs reported in (2005) 3 Supreme Court Cases 738. He has also relied upon the decision in the case of Padmanabh Silk Mills Vs. Union of India reported in 2005 (1) GLR 74 and unreported decision dated 08.02.2018 rendered by the Division Bench of this Court in Special Civil Application No.3780 of 2004 as also the decision of Allahabad High Court in the case of Super Cassettes Indus. Ltd. Vs. Commissioner of C. Ex. reported in MANU/UP/ 1215/ 1999. 11. It is undisputed fact that in view of the Notification No.41/2007-ST dated 06.10.2007, the petitioner became eligible to the refund of the duty, which has paid to the service provider in respect of service availed for the export of goods. It is undisputed fact that the petitioners promptly lodged refund claim on 13.06.2016, which was rejected by the respondent No.2. The petitioner ultimately got the order of full refund vide order of Appellate Tribunal dated 25.05.2018, whereupon they claimed refund with interest by submitting letter dated 12.06.2018 to the respondent No.2. They have got the refund of the duty without interest on the specious ground that the refund was paid within three months on 12.07.2018. We are unable to countenance the contention of learned advocate for Page 7 of 9 C/SCA/13222/2018 JUDGMENT the respondents that the refund was paid promptly within two months after receipt of formal letter and also after the decision of the Appellate Tribunal. We are of the considered opinion that the initial claim application dated 13.06.2016 for the refund of the duty was prosecuted by the petitioners upto the Commissioner (Appeals) to get full refund of the duty. It is worthwhile to note that the Appellate Tribunal passed order on 25.05.2018 with all consequential relief. It is thus, very clear that the consequential relief would include payment of interest on delayed refund payment. Section 11BB of the Central Excise Act contemplates that if the refund is not paid within three months of the application, the assessee becomes entitled to the interest not below 5% and not exceeding 30% p.a. as is for the time being fixed by Central Government by Notification in the Official Gazette. We are of the view that the order of the Appellate Tribunal relates back to the initial / original application dated 13.06.2016 and therefore, the petitioners have become entitled to receive interest on the delayed payment of the duty. 12. The decisions relied upon by Mr. Dave, learned advocate for the petitioners are squarely applicable to the facts of the present case and therefore, we are of the considered view that refusal of the interest by the respondent No.2 from the date of initial application for the refund is not in consonance with the provisions of Section 11BB of the Central Excise Act. 13. The contention of Mr. Gautam, learned advocate for the respondents is not maintainable as alternative remedy is available to the petitioners cannot be accepted. The decisions relied upon by him to resist present petition are not applicable to the facts of the present inasmuch as those decisions are in Page 8 of 9 C/SCA/13222/2018 JUDGMENT respect of refund of pre-deposit and not the duty. Moreover, the respondents have withheld interest on untenable ground. The claim of the interest by the petitioners from the date of their original application cannot be said to be resulted into unlawful enrichment. 14. For the forgoing reasons, the petition succeeds and is hereby allowed. The respondents are directed to pay the interest on delayed refund of Rs.32,26,804/- for 3 years from 14.09.2016 to 12.07.2018 under Section 11BB of the Act in accordance with law. Parties to bear their own costs. Rule is made absolute. (S.R.BRAHMBHATT, J) (A.G.URAIZEE, J) YNVYAS Page 9 of 9 "