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Karnataka High Court · body

2015 DIGILAW 273 (KAR)

MADURA COATS v. UNION OF INDIA

2015-03-11

S.SUJATHA, VINEET SARAN

body2015
Judgment This is an unusual case where, despite there being a direction by the competent authority to refund the service tax deposited by the appellant, the same has not been refunded by the respondent – authority, even though the stay application filed by the respondent along with the appeal challenging the order of refunding the amount to the petitioner/appellant has been dismissed. 2. The dispute in the present petition is as to, “Whether the petitioner/appellant was liable for payment of service tax for the period 10.09.2004 to 31.12.2004, as the service tax is paid in the present case by a nonresident person?” 3. In a nutshell, it may be stated that after a long drawn litigation, by order dated 28.05.2009 passed by the Commissioner of Central Excise and Service Tax Appellate Tribunal, the claim of the petitioner for refund of the service tax paid for the period 10.9.2004 to 31.12.2004 was allowed and it was directed to be refunded to the petitioner/appellant. After the passing of the aforesaid order, the appellant/petitioner filed another application for refund of the service tax deposited by it, which was allowed to the extent that the petitioner/appellant/assessee was found entitled to the refund of Rs.15,16,992/- but a direction was given to credit the same to the Consumer Welfare Fund as provided under section 11B(2) of the Central Excise Act, 1944, without making payment to the assessee, on the ground that payment to the assessee would amount to undue enrichment. Challenging the said order, the appellant filed an appeal before the Commissioner of Central Excise (Appeals) which was allowed by order dated 28.12.2011 whereby the amount of service tax was ordered to be paid to the appellant. Challenging the aforesaid order, respondent no.2 – Commissioner of Service Tax filed an appeal before the Appellate Tribunal along with an application for staying the implementation of the appellate order passed by the Commissioner of Central Excise. The said application for stay was rejected by the Tribunal on 10.9.2012. 4. Despite the rejection of the stay application of the respondent by the Tribunal, the service tax deposited by the appellant/petitioner was not refunded. The said application for stay was rejected by the Tribunal on 10.9.2012. 4. Despite the rejection of the stay application of the respondent by the Tribunal, the service tax deposited by the appellant/petitioner was not refunded. Hence, the appellant filed Writ Petition No.3740/13 with the prayer for a direction for payment of the said Service Tax, which has been disposed of by judgment and order dated 11.3.2013 with a direction that the appellant/petitioner would be entitled to interest @ 12% p.a. from the date of deposit up to the date of payment instead of 6% p.a. as prescribed under Section 11BB of the Central Excise Act but did not grant any direction for payment of the service tax so deposited by the petitioner/appellant. 5. Aggrieved by the said order, this appeal has been filed. 6. We have heard Sri Rajesh Chander Kumar, learned counsel for the appellant as well as Sri K.N. Mohan, learned counsel for contesting respondents 2 and 3 and perused the records. 7. The submission of learned counsel for the respondent is that in case the appeal is allowed and the amount of service tax is refunded to the appellant, the appeal filed by the respondent and pending before the Appellate Tribunal would become infructuous. He thus contends that this appeal should be dismissed and the claim of the appellant for refund of the service tax be rejected. 8. The facts as stated above are not disputed by the learned counsel for the parties. It is also not disputed that in the appeal filed by the department which is pending before the Appellate Tribunal, the stay application has been dismissed. If the contention of the learned counsel for the respondent is accepted, then the filing of the stay application by respondent in its appeal before the Tribunal would become meaningless and so would be the rejection of the stay application. Mere fact that the stay application of the respondent has been rejected by the Tribunal would mean that the order of the Appellate Authority dated 28.12.2011 was to be given effect to. The order passed by the Tribunal rejecting the stay application has not been challenged by the respondent. Mere fact that the stay application of the respondent has been rejected by the Tribunal would mean that the order of the Appellate Authority dated 28.12.2011 was to be given effect to. The order passed by the Tribunal rejecting the stay application has not been challenged by the respondent. If the contention of the learned counsel for the respondent is accepted that since the appeal is pending before the Tribunal the refund should not be directed, then it is not understood that why at all the respondent had filed an application for grant of stay before the Tribunal. 9. The respondent was fully aware that it was liable to refund the service tax deposited by the appellant in terms of the order dated 28.12.2011 and for that reason it had filed the stay application and once the stay application had been rejected, the order dated 28.12.2011 ought to have been implemented, as it is a fact that the order dated 10.9.2012 rejecting the stay application had become final. In such view of the matter, though the observations of the learned Single Judge that the respondent would be liable to pay interest @ 12% p.a. may not be interfered with but, in our view, the writ Court ought to have allowed the writ petition and directed refund of the service tax deposited by the petitioner/appellant. 10. For the foregoing reasons, we allow this appeal as well as the writ petition filed by the appellant/petitioner and direct that the order dated 28.12.2011 passed by the Commissioner of Central Excise (Appeals) in Appeal No.455/11 be implemented and the petitioner/appellant be refunded the amount of service tax so deposited along with interest to which he may be entitled to. The refund may be given to the petitioner/appellant by the respondent as expeditiously as possible, but, not later than six weeks from the date of filing of the certified copy of this order before the respondent. The respondent shall be at liberty to file an application for expeditious disposal of the appeal so filed by the respondent and pending before the Appellate Tribunal. Refund of service tax by the respondent shall be subject to the final orders passed by the Appellate Tribunal in the appeal filed by the respondent.