Case Law Details
Principal Commissioner of Central Goods and Service Tax Vs Green Valliey Industries Pvt Ltd (Meghalaya High Court)
Introduction: In a significant ruling, the Meghalaya High Court has addressed the issue of whether an assessee is entitled to claim interest on the refund of a deposit made “under protest” during an investigation. While Section 11B of the Central Excise Act, 1944 does not explicitly provide for interest on such refunds, the court examined the circumstances of the case to determine whether the assessee’s claim for interest was justified.
Analysis: The case involved an investigation initiated against the assessee for claiming excess cenvat credit. Before any show-cause notice or demand was issued, the assessee made a deposit of Rs. 94 lakh under protest. Subsequently, the Tribunal found that the assessee was liable to refund cenvat credit of approximately Rs. 97 lakh, out of which Rs. 78 lakh was to be refunded to the assessee. The key contention was whether the assessee was entitled to interest on the delayed refund made by the Department.
The Meghalaya High Court upheld the view taken by the Appellate Tribunal that the refund in this case was not related to excess duty or interest on duty. Therefore, the implied embargo on interest under Section 11B of the Act would not apply. The court noted that the deposit made by the assessee was not on account of any interest or duty but was purely a deposit made under protest.
The Department argued that the initial deposit was made in anticipation of a claim for excess cenvat credit and, therefore, should be considered as a deposit towards duty. However, the court rejected this argument, stating that the deposit was made when no quantified claim had been made on the assessee, and hence, it could not be considered as a deposit towards duty or interest.
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