V. Unnikrishnan, Cochin
As per amendment to sec 35F, from Oct, 2014 the mandatory pre deposit of 7.5 and 10 percentage of tax demanded has been implemented.
2. The procedure on refund of this pre deposit at the end of winning the appeal is not yet notified.
3. In a recent case, when the predeposit was not refunded suo moto, the party when contacted department,was orally instructed to file formal refund application as prescribed in terms of sec 11B. After shuttling the application given in the range office/division ,consequent to reorganizing after GST, was finally reckoned to be received only on the date of receipt in the new jurisdictional division office.
However, by this time, the time limit of one year after date of appellate order was over and thus the refund was rejected as time barred as per sec. 11B.
4. The following points appears relevant on this issue.
As per Explanation under sec 11BB, the appeal order itself is deemed to be treated as an order passed under sec 11B(2).
Again, the provisions of sec 35FF is also worth reading, as per which, interest is to be paid if the refund of pre deposit is not given within three months after appellate orders.Here again,provision should have been to allow interest from date of pre deposit till the refund is given. Further,here also no mention about the procedure of sanction of refund.
5. The SCN has relied on Eplanation B (ec) under sec 11B to reject the refund of pre deposit. This section inserted from 11-5-2007,is on the refund of DUTY paid as per appellate orders. Admittedly, pre deposit is not a duty and thus this section can’t be made applicable.
Moreover, after the mandatory pre deposit introduced from 2014,the procedure for refund under sec 11B has not been revised to incorporate such refunds.
6. It is felt that combined reading of the Explanation s given under sec 11BB and 35FF, implies suo moto refund within three months after the appeal orders by the higher forums.
It is imperative that the appeal orders should indicate the refund of pre deposit made as a consequential relief while allowing the appeals.
7. Considered views of learned experts are solicited in the matter for appropriate remedial action as deemed fit by CBIC as lakhs of refund claims will be affected by such lapses.
Further comment by the Author
The Board,s circular no.974/08/2014 CX dated 16/09/2014 has updated the procedure for refund of pre deposit. This inter alia has stated that a simple request letter need be filed and within 15 days of receiving same,refund is to be given.
Further,as paer amendment made in 35FF,the interest is to be given from date of pre deposit till date of refund.
As per notification no.24/2014 CE(NT) dt.12/8/2014, rate of interest is fixed as 6 percent.only.
It has been made clear that these changes would apply for the mandatory pre deposit effective from 2014. Old cases will continue to be governed by earlier provisions of sec 35FF.
It is rather unfortunate that such vital changes made by CBECas part of ease of doing business and make in India are not being brought in practice by field officers.