Sri Mallikarjun Lingappa Pujari V. The Assistant Commissioner of Central Excise and Service Tax Gulbarga Division

CEA/200001/2015

AI Insights

The case revolves around a dispute concerning the refund of service tax and penalties imposed under the Central Excise Act, 1944, and the Finance Act, 1994. The appellant, Sri Mallikarjun Lingappa Pujari, contested the penalties and service tax demands made by the Central Excise authorities. Initially, the adjudicating authority imposed a service tax and penalties, which were partially contested and led to a refund claim by the appellant after the penalties were adjusted. The refund claim was rejected as time-barred, leading to the appeal in the High Court. The central legal issue was the applicability of the limitation period for filing a refund claim post-appeal, particularly focusing on the doctrine of merger and the relevant date for calculating the limitation period under Section 11B of the Central Excise Act.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 805865 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-09-2019
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Bombay vs. Amritlal Bhogilal & Co.
• Laws Referred To: Central Excise Act, 1944, Finance Act, 1994
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S N RAJENDRA
• Assessee Lawyers: VISHWAKRAMARAJ NAYAK
• Keywords: Central Excise Appeal; Doctrine of Merger; Limitation Period; Penalty; Refund; Service tax
• Section: 77; 78; 11B; 11B(1); 35G; 11B(5)(ec)

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 13TH DAY OF SEPTEMBER 2019 PRESENT THE HON’BLE MRS.JUSTICE S.SUJATHA AND THE HON’BLE MR.JUSTICE N.K.SUDHINDRARAO CENTRAL EXCISE APPEAL NO.200001/2015 Between: Sri Mallikarjun Lingappa Pujari S/o Lingappa Pujari Ananda Nivas, Ram Mandir Area Wadi, Dist.Gulbarga …Appellant (By Sri Vishwakramaraj Nayak, Advocate) And: The Assistant Commissioner of Central Excise and Service Tax Gulbarga Division Behind TV Station Gulbarga-585 104 …Respondent (By Sri S.N. Rajendra, Advocate) 2 This Central Excise Appeal is filed under Section 35G of the Central Excise Act, 1944, praying to allow the appeal by setting aside the Final Order No.26724/2013 dated 09.10.2013 passed by the CESTAT (Tribunal) and direct the respondent to grant refund of Rs.1,39,252/-. This appeal is coming on for hearing, this day, S .SUJATHA J., delivered the following: JUDGMENT This appeal is filed under Section 35G of the Central Excise Act, 1944 (‘Act’ for short) by the assessee relating to the period April-2004 to September-2006. 2. Proceedings were initiated under the provisions of the Act relating to the management, maintenance or repair service or MMR and commercial construction service to bring the service activities of the assessee to tax net. Service tax of Rs.5,44,101/- was demanded as per the show-cause notice dated 08.06.2007 and an order was passed by the adjudicating authority determining the service tax of Rs.4,05,258/- with penalty of Rs.1,000/- under Section 77 and Rs.4,05,258/- under Section 78 of the Finance Act, 1994 (for short ‘Act, 1994’) with interest. 3 The said service tax of Rs.4,05,258/- was ordered to be appropriated from an amount of Rs.5,44,510/- deposited by the assessee. The said order was challenged by the assessee before the Commissioner inasmuch as the penalty levied under Sections 77 and 78 of the Act, 1994. The Appellate Authority confirmed the penalty of Rs.1,000/- levied under Section 77 of the Act, 1994 and set aside the penalty imposed under Section 78 of the said Act by order dated 03.03.2010. Pursuant to which a refund claim was made by the assessee on 12.08.2010 which has been rejected as time barred. Being aggrieved by the same, assessee preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bengaluru. The said appeal has been rejected. Hence, the assessee is in appeal before this Court. 4 3. Learned counsel for the assessee submits that the order of original adjudicating authority has merged with the order of the Appellate Authority. Hence, the refund claimed within one year from the date of the order of the Appellate Authority is well within the period of limitation. 4. Learned counsel for the revenue supporting the order impugned submitted that the refund claim has to be made within one year from the relevant date in terms of Section 11B of the Act, admittedly such claim was made on 12.08.2010, beyond the period of limitation considering the date of deposit made on 06.09.2007, pursuant to the show cause notice issued. 5. Heard the learned counsel for the parties and perused the material on record. 5 6. The substantial questions of law that arises for our consideration are; 1. Whether the provisions of Section 11B(5)(ec) or Section 11B(5)(f) of the Central Excise Act, 1944 are applicable in case where the Order- in-Original is challenged inasmuch as the levy of penalty and such levy of penalty is set aside by the Appellate Authority? 2. Whether under the facts and circumstances of the case, the Order-in-Original passed by the Respondent adjudicating authority merges with the Order-In-Appeal passed by the Commissioner of Central Excise(Appeals)? 7. It is beneficial to refer to the relevant provisions of Section 11B of the Act. Sections 11B(1) and 11B(5)(ec) of the Act read thus; “11B(1). Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such Form an manner as may be prescribed and the application 6 shall be accompanied by such documentary or other evidence including the documents referred to in Section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty and interest if, any, paid on such duty had not been passed on by him to any other person. 11B(5)(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of Appellate Authority, Appellate Tribunal or any Court, the date of such judgment, decree, order or direction.” 8. Indisputably, the order of the original adjudicating authority was passed on 16.12.2008, confirming the demand of Service Tax of Rs.3,84,478/-, setting aside the demand of Rs.1,37,246/- + Education Cess of Rs.3,007/-. Penalty under Sections 77 and 78 of the Act, 1994 was imposed at Rs.4,05,258/- and Rs.1000/-, respectively. It was ordered that the appropriation of Rs.4,05,258/- shall be made out of the 7 total amount of Rs.5,44,510/- paid towards the demand made in terms of the show-cause notice. 9. It is not in dispute that an appeal was preferred by the assessee under Section 35A (2) of the Act and the same came to be disposed of on 03.03.2010, whereby the order of penalty imposed under Section 78 of the Finance Act, 1994 has been set aside and penalty under Section 77 of the said Act has been confirmed. In terms of the said order dated 03.03.2010, the order dated 16.12.2008 has been merged. The refund application was filed by the assessee on 12.08.2010 subsequent to the order of the Appellate Authority dated 03.03.2010, which is well within the period of one year in terms of Section 11B (1) of the Act. The quantum of tax, penalty and interest has to be determined after adjudication by the original-adjudicating Authority. The amount of tax demanded as per the show-cause notice was deposited by the assessee. 8 10. The stand of the respondent-revenue that section 11B(5)(ec) is not applicable to the order passed by the original adjudicating-authority and even otherwise, the refund application dated 12.08.2010 filed by the assessee is beyond the period of one year from the date of the order of the original-authority cannot be countenanced. 11. At this juncture, it would be beneficial to refer to the judgment of the Hon’ble Apex Court in the case of Commissioner of Income Tax, Bombay vs. Amritlal Bhogilal & Co. reported in AIR 1958 SC 868, whereby the Hon’ble Apex Court has observed thus: “10. There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the Appellate Authority is the operative decision in law. If the Appellate Authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely confirms the 9 decision of the Tribunal. As a result of the confirmation or affirmance of the decision of the Tribunal by the Appellate Authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement.” 12. As could be seen, the actual liability would be determined subsequent to the order of the Appellate Authority. On the liability created towards the penalty, the amount in balance deposited by the assessee would have been appropriated/adjusted. No question of refund would have arisen if no appeal was preferred by the assessee though relating to the penalty aspect. The actual liability is crystallized subsequent to the order passed by the Appellate Authority. The doctrine of merger being applicable to the case on hand to determine the actual liability and to raise the demand, the relevant date in terms of Section 11B (1) of the Act would be 03.03.2010, the date of passing of the order by the Appellate Authority. Hence, the view of the respondent-revenue in denying the 10 refund claimed by the appellant is unjustifiable and hit by Article 265 of the Constitution of India. 13. Accordingly, we answer the substantial questions of law in favour of the assessee and against the revenue. The respondent - revenue shall consider the claim of the assessee/appellant for refund of the excess amount deposited and shall refund the same to the appellant in an expedite manner. Appeal stands allowed in terms of the above. Sd/- JUDGE Sd/- JUDGE BL/LG "