Case Law Details
UPL Limited Vs Union of India (Gujarat High Court)
It is an undisputed fact that the petitioner paid custom duty to the tune of Rs.17,25,172/- for the goods imported on 11/04/2016. Again he paid an amount to the tune of Rs.95,07,943/- on 12/04/2016 for different consignment imported by the petitioner. The petitioner was supposed to pay custom duty to the tune of Rs.77,82,771/-, however bonafide mistake committed on the part of the petitioner, he added the amount of Rs.17,25,172/-, which was already paid towards customs duty just prior to one day before second payment. It is not in dispute that the excess amount to the tune of Rs.17,25,172/- was paid by the petitioner. The authority has rejected the claim only on the ground of limitation.
We are in agreement with the submissions made by Mr.Shah that the amount of Rs.17,25,172/-, which was paid on second day i.e. on 12/04/2016 was not paid towards any custom duty but the amount again paid, which is already paid on earlier date i.e. on 11/04/2016 and therefore, it cannot be treated as duty and therefore, in our opinion, an excess amount paid by the petitioner, which the authority is not entitled to retain and needs to be refunded to the petitioner.
We are of the opinion that the petitioner would be entitled for refund of the excess amount paid towards duty i.e. Rs.17,25,172/-.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Rule. Mr.Priyank Lodha, learned advocate waives service of Rule on behalf of respondent Nos.2 & 3. Since the pleadings are completed, with the consent of learned advocates appearing for the respective parties, the petition is taken up for hearing today.
2. By way of the present petition under Articles 226 of the Constitution of India, the petitioner has prayed to issue a writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India, to quash and set aside the impugned communication F.No.S/6-Misc./Ref/2017-18 dated 31.01.2018 issued by the Respondent No.2 and Communication F.No.S/6-Misc./Refund/2017-18 dated 18.10.2018 issued by the respondent No.3, by which, the respondents have refused to sanction and grant petitioner’s refund claim towards excess custom duty to the tune of Rs.17,25,172/-. The petitioner has further prayed to direct the respondent authorities to pay the said amount with interest thereon at the rate of 18% per annum from 12/04/2016 till the date of payment of the said refund to the petitioners.
3. In response to the Notice issued by this Court, the respondent Nos.2 & 3 have appeared through learned advocate Mr.Priyank Lodha and have filed affidavit-in-reply dated 17/06/2019 and opposed to grant any relief, as prayed for, by the petitioner.
4. The case put forward by the petitioner, is as under:
That the petitioner, a company, incorporated under the Companies Act,1956, is engaged inter alia, in the manufacture, exports and imports the goods. As per the provisions of Central Excise Tariff Act,1985, when the goods are imported by the petitioner, appropriate customs duties are paid to the respondent authorities. The petitioner company imported certain goods, for which, total amount of Rs.17,25,172/- was paid to IDBI Bank towards custom duty, for which, e-Payment Cyber Receipt was issued by the authority. The said amount was paid on 11/04/2016.
The petitioner imported another consignment of goods and for the same, he has paid an amount of Rs.95,07,943/- on 12/04/2016, on the next date of earlier first deposit.
It is the case of the petitioner that the petitioner was supposed to pay custom duty for second consignment to the tune of Rs.77,82,771/-. However, through oversight and bonafide mistake, the petitioner paid the aforesaid amount of Rs.95,07,943/- adding the earlier amount of Rs.17,25,172/-.
Having come to know about the same, an application in form of 102, under section 27 of the Customs Act, was filed with the respondent authority on 24/01/2018 and stated the ground of claim mentioning that the duty amount of Rs.17,25,172/- is paid twice through oversight and mistake and therefore, the same shall be refunded.
The said application came to be rejected by communication/ order dated 31/01/2018 on the ground that the claim was barred by limitation as provided sub-section (1) of section 27 of the Customs Act. Hence, this petition.
5. Mr. Dhaval Shah, learned advocate appearing for the petitioner would submit that the petitioner was not liable to pay Rs.95,07,943/- towards customs duty for the goods imported by him on 12/04/2016, however by mistake, additional amount of Rs.17,25,172/-was paid again on 12/04/2016 along with custom duty with regard to another consignment imported by the petitioner. The petitioner was suppose to pay customs duty to the tune of Rs.77,82,771/- only. However, through oversight and bonafide mistake, he added an amount of Rs.17,25,172/-, which was already paid on 11/04/2016 for another consignment. He would further submit that this additional amount paid is not a duty paid in excess or claiming any benefits under any other head, as provided under the Customs law. It is merely a mistake committed by the petitioner in paying the duty for the same goods on two occasions and therefore, it cannot be treated as duty as referred under section 27 of the Act and therefore, limitation would not be applicable. He would submit that the authority cannot withheld the amount, which was paid merely by mistake by the petitioner and therefore, the authority may be directed to refund the amount with interest. In support of his submissions, he has relied upon following decisions :
(i) Swastik Sanitarywares Ltd. Vs. Union of India reported in 2013(296) E.L.T. 321 (Guj.)
(ii) National Institute of Public Finance & Policy Vs. Commissioner of Service Tax reported in 2019(20) G.S.T.L. 330 (Del.)
(iii) Parijat Construction Vs. Commissioner of Central Excise, Nashik reported in 2018(359) E.L.T. 113 (Bom.)
(iv) 3E Infotech Vs. CESTAT, Chennai reported in 2018(18) G.S.T.L. 410 (Mad.)
(v) Joshi Technologies International Vs. Union of India reported in 2016(339) E.L.T. 21 (Guj.)
(vi) Greaves International Ltd. & Anr. Vs. UOI & Ors. reported in 1992(39) ECR 327 (Bombay)
(vii) Oil & Natural Gas Corporation Ltd. Vs. Union of India reported in 2017(354) E.L.T. 577 (Guj.)
(viii) Salonah Tea Co. Ltd. Vs. Supt. of Taxes, Nowgong reported in (1988)1 SCC 401
(ix) M/s.Comsol Energy Private Limited V/s. State of Gujarat delivered by Division Bench of this Court on 21/12/2020 in Special Civil Application No.11905 of 2020.
By taking us through the ratio laid down by this court in the case of Swastik Sanitarywares Ltd. (supra), he would submit that in the said case, it has been categorically held that if the amount is paid by mistake, the authority has no right to retain the said amount and accordingly, it was directed to be refunded. By relying upon the decision rendered in the case of M/s.Comsol Energy Private Ltd. (supra), Mr.Shah would submit that in similar facts of the case, the amount paid in excess to the authority, was directed to be refunded since the application was made within a reasonable time. He would submit that the application under section 27 of the Act, has been preferred in less than 2 years and that can be treated as reasonable time taken by the petitioner for asking of the refund and therefore, he would submit that the petition may be allowed.
As far as interest is concerned, learned advocate Mr.Dhaval Shah has relied upon the provisions of section 27A of the Customs Act and has submitted that the respondent is duty bound to pay the interest if the amount is not refunded within three months and therefore, he would submit that appropriate interest may be awarded.
6. On the other hand, Mr.Priyank Lodha, learned advocate appearing for the respondent Nos.2 and 3, has opposed this petition and has submitted that the authorities are bound by the provisions of law and when the application is made under section 27 of the Act, the limitation would be applicable. He would submit that it is the case of the petitioner that excess payment is made on 12/04/2016, however, he has made an application after a period of more than one year and therefore, the authority has rightly denied the refund application.
Learned advocate Mr.Priyank Lodha has relied upon Public Notice No.15/2015 dated 12/08/2015 issued at the instance of the Commissioner of Customs, New Delhi and has submitted that even in case of double/ multiple amount of customs duty is paid, section 27 of the Customs Act,1962 would be applicable and therefore, it is presumed that the petitioner was aware that he was supposed to file an application within a period of one year and therefore, he would submit that this petition may be rejected.
He would submit that the petitioner would not be entitled for any interest in view of the fact that he was not entitled for any refund, which has been rightly held by the authority and therefore, this petition may be dismissed. In support of his submissions, he has relied upon the decision rendered in the case of Joshi Technologies International (Supra).
7. We have heard learned advocates appearing for the respective parties. It is an undisputed fact that the petitioner paid custom duty to the tune of Rs.17,25,172/- for the goods imported on 11/04/2016. Again he paid an amount to the tune of Rs.95,07,943/- on 12/04/2016 for different consignment imported by the petitioner. The petitioner was supposed to pay custom duty to the tune of Rs.77,82,771/-, however bonafide mistake committed on the part of the petitioner, he added the amount of Rs.17,25,172/-, which was already paid towards customs duty just prior to one day before second payment. It is not in dispute that the excess amount to the tune of Rs.17,25,172/- was paid by the petitioner. The authority has rejected the claim only on the ground of limitation. Relevant provisions of Sections 27 & 27A of the Customs Act, are reproduced as under:
27. Claim for refund of duty.– (1) Any person claiming refund of any duty or interest,-
(i) paid by him; or
(ii) borne by him,
may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, before the expiry of one year, from the date of payment of such duty or interest:
Provided that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under subsection (1), as it stood before the date on which the Finance Bill,2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub-section (2):
Provided further that the limitation of one year shall not apply where any duty or interest has been paid under protest:
Provided also that where the amount of refund claimed is less than rupees one hundred, the same shall not be refunded.
… … …
27A. Interest on delayed refunds.– If any duty ordered to be refunded under subsection (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under subsection (1) of that section, there shall be paid to that applicant interest at such rate, not below five percent and not exceeding thirty percent per annum as is for the time being fixed by the Central Government by Notification in the Official Gazette, on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty;
Provided that where any duty, ordered to be refunded under sub-section (2) of section 27 in respect of an application under subsection (1) of that section made before the date on which the Finance Bill,1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.
8. We are in agreement with the submissions made by Mr.Shah that the amount of Rs.17,25,172/-, which was paid on second day i.e. on 12/04/2016 was not paid towards any custom duty but the amount again paid, which is already paid on earlier date i.e. on 11/04/2016 and therefore, it cannot be treated as duty and therefore, in our opinion, an excess amount paid by the petitioner, which the authority is not entitled to retain and needs to be refunded to the petitioner.
9. In the case of Swastik Sanitaryware (supra), this aspect with regard to similar provision under Excise Act, has been dealt with in Para-17 and it has been held by relying upon unreported decision dated 05/07/2012 rendered by this Court in the case of C. Patel & Associates Pvt. Ltd. Vs. Union of India in Special Civil Application No.1861 of 2005. Para-17 of the aforesaid judgement read as under:
“17. In a recent judgment in case of C.C. Patel & Associates Pvt. Ltd. (supra), this court had occasion to deal with somewhat similar situation where the petitioner had deposited service tax twice which was not being refunded by the Department. In that context, it was observed as under:-
(12) We fail to see how the department can withhold such refund. We say so for several reasons. Firstly, we notice that under sub-section(3) of section 68, the time available to a service provider such as the petitioner for depositing with the Government service tax though not collected from the service recipient was 75 days from the end of the month when such service was provided. This is in contrast to the duty to be deposited by a service provider upon actual collection by the 15th of the month following the end of the month when such duty is collected. Sub-section (3) of section 68 thus provided for an outer limit of 75 days, but never provided that the same cannot be paid by the 15th of the month following the end of the month when such service was provided. Thus, if the petitioner deposited such duty with the Government during a particular quarter on the basis of billing without actual collection, he had discharged his liability under sub-section (3) of section 68. Thereafter, on an artificial basis, the Assessing Officer could not have held that he ought to have deposited same amount once all over again in the following quarter. This is fundamentally flawed logic on the part of the Assessing Officer.
(13) Further, to accept such formula adopted by the Assessing Officer would amount to collecting the tax from the petitioner twice. The petitioner having already paid up the service tax even before collection in a particular quarter, cannot be asked to pay such tax all over again in the following quarter on the same service on the ground that such tax had to be deposited in the later quarter but was deposited earlier. Any such action would be without authority of law. Further, before raising demand of Rs.1,19,465/- under the head of duty short paid, the Assessing Officer should have granted adjustment of the duty already paid by the petitioner towards the same liability.
(14) Under the circumstances, we are of the opinion that the department cannot withhold such amount which the petitioner rightfully claimed. Under the circumstances, question of applying limitation under section 11B of the Act would not arise since we hold that retention of such service tax would be without any authority of law.”
We are also in agreement of the observation made in Para-15 of the said judgement and therefore, we are of the opinion that the petitioner would be entitled for refund of the excess amount paid towards duty i.e. Rs.17,25,172/-.
10. As far as observations made in the decision of Swastik Sanitarywares Ltd. (supra) with regard to claiming such refund within reasonable time is concerned, it is an undisputed fact that the application was made in less than two years from the date of payment of customs duty and therefore, decision rendered by coordinate bench of this Court in the case of M/s.Comsol Energy Private Limited (supra) would come into play. The same issue has been dealt with by Division Bench of this Court in the case of M/s.Comsol Energy Private Limited (supra). Para-9 of the aforesaid judgement is relevant, which is reproduced as under :
“9. Similar situation arose in the case of Joshi Technology International vs. Union of India, reported in 2016 (339) ELT 21 (Guj),
wherein this Court held that the statutory time limit provided under Section 11B of the Central Excise Act is not applicable to the claim of refund of duty paid under mistake as the same was paid under mistake of law and, therefore, such claim is considered as outside purview of enactment. It was held that general provisions provided under the Limitation Act is applicable to claim refund of such duty. The relevant paragraphs of the decision are given as under :
“14.4 Thus, in view of the principles enunciated by the Supreme Court in Salonah Tea Co. Ltd. v. Superintendent of Taxes, Nowgong (supra), in case where money is paid by mistake, the period of limitation prescribed is three years from the date when the mistake was known. Besides, section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Therefore, in case where money is paid under a mistake, the limitation would begin to run only when the applicant comes to know of such mistake or with reasonable diligence could have discovered such mistake. Adverting to the case at hand, the mistake is in the nature of a mistake of law. It appears that the legal position was not clear and hence, pursuant to representations made by the trade and field formations, the CBEC was required to issue the circular dated 07.01.2014 clarifying the issue. As noticed earlier, the petitioner had all along, right from July 2004 been paying Education Cess and subsequently, from the year 2007 was paying Secondary and Higher Secondary Education Cess, till April 2014. It was only when the Circular dated 07.01.2014 came to be issued by the CBEC, clarifying the issue, that the petitioner came to know about its mistake. Considering the nature of the mistake and the fact that the issue was not free from doubt till the above circular came to be issued by the CBEC, it also cannot be said that the petitioner could with reasonable diligence have discovered the mistake. It appears that it is only sometime after the Education Cess and Secondary and Higher Secondary Education Cess came to be paid for the month of April 2014 that the petitioner came to know about its mistake and in July 2014, it filed the application for refund before the second respondent. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, as discussed hereinabove, the retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law and hence, in the light of the decision of this court in Swastik Sanitarywares Ltd. v. Union of India (supra), the question of applying the limitation prescribed under section 11B of the CE Act would not arise.
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TO SUMMARISE:-
-Merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund viz., the machinery provisions have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed under the provisions of the OID Act assumes the character of central excise duty. The finding recorded by the adjudicating authority that the Oil Cess is in the nature of excise duty, is erroneous and contrary to the law laid down by this court in Commissioner v. Sahakari Khand Udyog Mandli Ltd. (supra).
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– In the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. The petitioner was, therefore, justified in filing the present petition before this court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake.
– Since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess, cannot in any manner be said to be a duty of excise inasmuch as what was paid by the petitioner was not a duty of excise calculated on the aggregate of all the duties of excise as envisaged under the provisions of section 93 of the Finance Act, 2004 and section 138 of the Finance Act, 2007. Thus, the amount paid by the petitioner would not take the character of Education Cess and Secondary and Higher Secondary Education Cess but is simply an amount paid under a mistake of law. The provisions of section 11B of the Central Excise Act, 1944 would, therefore, not be applicable to an application seeking refund thereof. The petitioner was therefore, wholly justified in making the application for refund under a mistake of law and not under section 11B of the Central Excise Act, 1944.
– Since the provisions of section 11B of the Act are not applicable to the claim of refund made by the petitioner, the limitation prescribed under the said provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, since the very retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law, in the light of the decision of this court in Swastik Sanitarywares Ltd. v. Union of India (supra), the question of applying the limitation prescribed under section 11B of the CE Act would not arise.
– Even in case where any amount is paid by way of self assessment, in the event any amount has been paid by mistake or through ignorance, it is always open to the assessee to bring it to the notice of the authority concerned and claim refund of the amount wrongly paid. The authority concerned is also duty bound to refund such amount as retention of such amount would be hit by Article 265 of the Constitution of India which mandates that no tax shall be levied or collected except by authority of law. Since the Education Cess and Secondary and Higher Secondary Education Cess collected from the petitioner is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the respondents have no authority to retain the same.”
Hence, we are of the opinion that the petitioner made an application within reasonable time and on that ground also, he would be entitled for refund of excess payment of customs duty.
11. As far as submissions made by learned advocate Mr. Lodha about the observations made in Para-19 in the case of Joshi Technologies International (Supra) with regard to refusing to grant any interest is concerned, we have come to the conclusion that the authority is not entitled to keep the excess amount , which he has refused way back in the year 2018 as well as in the latest judgement of Division Bench delivered in the case of M/s. Comsol Energy Private Limited (supra), wherein after considering the case of Joshi Technologies International (Supra), interest has been paid.
12. Having heard learned advocate appearing for the respective parties and considering the overall facts and circumstances of the case, we are of the opinion that the petitioner is entitled to get refund of Rs.17,25,172/- along with interest @ 6 % per annum from 01/05/2018 till the amount is paid. This rate of interest would be applicable, if the amount is paid within a period of three months. If the amount is not paid within a period of three months, the respondent is liable to pay interest @ 12% per annum subsequent thereof. Rule is made absolute to the aforesaid extent.
