NICO Extrusions Ltd. Vs Union of India & Anr. (Bombay High Court)
Bombay High Court: Cash refund claim of pre-deposit for pre-GST regime, must be examined in light of Section 142
Summary: The Petitioner is a manufacturer. There was a demand of central excise duty raised on it. It made a pre-deposit; for filing an appeal, partly in cash and partly through debit in the credit ledger. It succeeded in appeal. It claimed a refund of such deposit. The order was passed, refunding the same in the credit account through PMT-03. The same was challenged in Writ Petition.
The Hon’ble Bombay High Court set aside the order and allowed the writ petition. It held: (i) the contention of the Petitioner in light of Section 142 for a cash refund needs to be examined; (ii) the issue being decided by this court in Combitic Global Caplet Pvt. Ltd. needs to be considered by the authorities; (iii) holds that the Petitioner should have been heard even when such sanction orders are passed; (iv) rejects the revenue’s submission on remedy of filing appeal on the ground that the order is violative of principles of natural justice; (v) accordingly; remands the matter back for a fresh decision.
Argued by Adv. Bharat Raichandani a/w Adv. Mahesh Raichandani i/b UBR Legal.
Cases Discussed
- Combitic Global Caplet Pvt. Ltd. Vs. The Union of India & Ors. (Bombay High Court)
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the petitioner.
2. The order impugned is dated 11th October, 2022 passed by respondent No.2-Assistant Commissioner, CGST & Central Excise, Division-VII, Daman. The operative part of the order reads thus:-
(i) I hereby sanction the refund claim of rs.20,00,000/- in respect of the pre-deposit made by the claimant in cash and order to pay the amount of Rs.20,00,000/- through cash under Section 11B of the Central Excise Act, 1944 read with Section 142(3) and Section 54 of the CGST Act, 2017.
(ii) I hereby order to recredit the refund claim of Rs.1,07,18,230/- by way of issuance of PMT-03, under the provisions of Section as per Section 54(1) of the CGST Act, 2017 read with Rule 86 (4A) of the CGST Rules, 2017.
(iii) I hereby sanction interest Rs.4,05,237/- to the claimant under Section 115 of CGST Act, 2017 read with Section 50(3) of CGST Act, 2017.”
3. We must say and as submitted by Mr. Kantharia, learned counsel for the respondent that the adjudicating authority has given detailed findings on the application made by the petitioner for refund. However, learned counsel for the petitioner submitted that the order passed serves no purpose, as the effect of the order is in respect of earlier regime of the Central Excise which is subsumed by the CGST Act. Mr. Kantharia, learned counsel submits that there are other aspects which have been considered by the authority in detail and hence the impugned order does not warrant any interference.
4. The other objection of Mr. Kantharia, learned counsel for the respondent is that the order in original is an appellable order.
5. We have gone through the impugned order. In the facts and circumstances of the present case, we are satisfied that the petitioner ought to have been heard before the application for refund was decided. When the authority has recorded detailed findings on various aspects, it would have been therefore appropriate in these peculiar facts, if the petitioner was given an opportunity of hearing. It is for this reason, we are satisfied that the impugned order deserves to be quashed and set aside. We have not made any observations on the correctness or otherwise of the findings recorded.
6. We are not inclined to relegate the petitioner to the remedy of an appeal as we are satisfied that the order passed in the facts and circumstances is in breach of principles of natural justice. Though Mr. Kantharia urged that the reasoning of the authority is completely in conformity and in consonance with the provisions of the law, we are not making any observations on merits on any of the findings.
7. It is the submission of the learned counsel for the petitioner that the application for refund and the issue raised therein is squarely covered by the decision of this Court in Combitic Global Caplet Pvt. Ltd. Vs. The Union of India & Ors. dated 10th June, 2024 in Writ Petition No. 729 of 2021. The said decision may be placed for consideration of respondent No.2 when the application for refund is heard.
8. In such view of the matter, the impugned order is quashed and set aside. The application for refund be considered afresh by respondent No.2 after hearing the petitioner. The petitioner to appear before respondent No.2 on 25th August, 2026 when respondent No.2 may fix further schedule. A request is made to respondent No.2 to decide the application for refund expeditiously and preferably within a period of eight weeks from 25th August, 2026. The petitioner to co-operate with the hearing and shall not seek unnecessary adjournments.
9. All contentions are kept open.
10. The petition is disposed of.
