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Case Law Details

Case Name : Commissioner of Central Goods & Service Tax Vs Dalmia Cement (Bharat) Ltd. (CESTAT Delhi)
Appeal Number : Service Tax Stay No. 50180 of 2020 (on behalf of the appellant) with Service Tax Appeal No. 50747 of 2020-SM
Date of Judgement/Order : 17/11/2021
Related Assessment Year :

Commissioner of Central Goods & Service Tax Vs Dalmia Cement (Bharat) Ltd. (CESTAT Delhi)

Having considered the rival contentions, I hold that once the four companies have become one, by merger, under operation of law w.e.f. 01.01.2015, as per order of the competent Court, the transactions between them during the effective date and the date of order of the competent Court, partake the character of mutuality and hence are no longer taxable by operation of law. Whatever tax is deposited by different companies during the intervening period, ipso facto becomes Revenue deposit. On such Revenue deposit, interest has to be paid in terms of Section 11BB of the Act, from end of three months from the date of refund claim.

FULL TEXT OF THE CESTAT DELHI ORDER

Heard the parties.

2. By virtue of order of NCLT dated 20.04.2018, three companies namely; i) M/s Adhunik Cement Ltd., ii) M/s DCB Power Ventures Ltd., and iii) M/s OCL India Ltd., are merged into M/s Dalmia Cement (Bharat) Limited (the merged company), w.e.f. 01.01.2015. Accordingly, the appellant applied for refund on the service transaction, between the aforementioned companies, and was granted refund of Rs.14,99,680/- + Rs.81,25,805/- totalling Commissioner determined 01.11.2018, being the date on which the order of merger of NCLT was produced before the Adjudicating Authority. Accordingly, he granted interest @ 6% p.a. w.e.f. 01.02.2019 (being three months from 01.11.2018). Being aggrieved, for not allowing appropriate interest, the assessee filed appeal before the Commissioner (Appeals) who vide the impugned order in appeal observed as follows:-

“4.(i) I have carefully gone through the facts of the case and considered the grounds of appeal made by the appellant. Briefly stated, the appellant have filed the refund claim of Rs.14,99,680/- along with interest in terms of order-in-appeal No. 37 to 39 Central Tax Appl-II Delhi 2019 dated 28.06.2019. The said refund claim has been sanctioned in full but interest is not granted as per Section 11BB of the Act. Hence, the present appeal.

(ii) I find that the present issue stands decided in favour of appellant vide the OIA dated 28.06.2019 (supra) wherein it has been categorically held that the appellant are entitled to interest under Section 11BB of the Central Excise Act, 1944. The judgment in Ranbaxy Lab. Vs. UoI [2011 (273) ELT 3 (SC) has also been relied upon by the undersigned to hold so which provides for payment of interest immediately after expiry of three months from the date of filing of refund claim. The Adjudicating Authority has considered the fact of non-submission of copy of NCLT order for not granting the interest from this date. However, this fact does not appeal to me for the reason that the law provides easy remedy for such defects in the form of returning the refund claim back to the appellant with deficiency memo. In this regard, para No. 2.4 of chapter 9 of CBEC‟s Excise Manual of Supplementary Instructions can be referred which provides that “It may not be possible to scrutinize the claim without the accompanying documents and decided about its admissibility. If the claim is filed without requisite documents, it may lead to delay in sanction of the refund. Moreover, the claimant of refund is entitled for interest in case refund is not given without three months of the filing of claim. Consequently, submission of refund claim without supporting documents will not be allowed. Even if claim is filed by post or similar mode, the claim should be rejected or returned with query. Memo. “The Adjudicating Authority has held that the interest is admissible only from 01.11.2018 when the copy of NCLT order has been produced by the appellant before the Adjudicating Authority. However, such plea loses its force in view of above instruction by CBEC. If the refund claim was deficient in documents, the same must have been returned back to the appellant with deficiency memo. Having failed to do so, the appellant are entitled to interest on delayed sanctioned refund claim from the date immediately after the expiry of three months from the date of receipt of refund claim till the date of actual refund‟ as per Section 11BB of the Act.

In view of the peculiar facts of the case, findings judgements and statutory provisions discussed hereinbefore, the appeal is allowed.”

3. The Commissioner (Appeals) allowed the appeal by observing that the assessee is entitled to interest as per the provisions of Section 11BB of the Act, from the end of three months from the date of the refund application. He also placed reliance on the ruling of the Hon’ble Supreme Court in the case of Ranbaxy Lab. wherein it has been held that for delay in granting refund by Revenue for alleged defect or any other flimsy ground, the interest has been allowed as per the statute. If the Revenue finds refund application to be defective or incomplete, the authority should return the refund application alongwith the defect memo.

4. Being aggrieved, the Revenue is in appeal before this Tribunal on the ground that the Commissioner (Appeals) has erred in granting interest from the expiry of three months. It is urged that prior to producing the order of NCLT before the Revenue Authority, different companies cannot be treated as one, or a single assessee. It is also urged that even if the refund application is made prior to the final order of NCLT, such application is not valid till that date, as the appellant was not legally single assessable unit. As the assessee have produced order granting merger, of NCLT before the Adjudicating Authority only on 01.11.2018, they are not entitled to interest prior to that date.

Central excise refund - Interest payable from end of three months from the date of refund claim

5. Learned Counsel Shri Abhishek Gupta, C.A. appearing for the respondent supports the order of Commissioner (Appeals) and also relying on the ruling of Hon’ble Supreme Court in the case of Union of India vs. Hamdard (Waqf) Laboratories -2017 (51) STR 214 (SC), wherein also the Hon’ble Supreme Court have followed its earlier judgement in the case of Ranbaxy Laboratories Ltd. vs. Union of India -2011 (273) ELT 3 (SC). Learned Counsel also prayed that in view of the Board Circular, specifis that for filing the appeal before Tribunal, the amount involved should not be less than Rs. 50 lakhs. He prayed that appeal may be dismissed with consequential relief.

6. Having considered the rival contentions, I hold that once the four companies have become one, by merger, under operation of law w.e.f. 01.01.2015, as per order of the competent Court, the transactions between them during the effective date and the date of order of the competent Court, partake the character of mutuality and hence are no longer taxable by operation of law. Whatever tax is deposited by different companies during the intervening period, ipso facto becomes Revenue deposit‟. On such Revenue deposit, interest has to be paid in terms of Section 11BB of the Act, from end of three months from the date of refund claim. Accordingly, I find that there is no error in the impugned order-in-appeal.

7. Accordingly, this appeal is dismissed and the order is upheld. The respondent-assessee is entitled to consequential benefits, in accordance with law. Stay application is also disposed of accordingly.

(Dictated and pronounced in open Court).

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