By TIOL News Service

CHANDIGARH , APRIL 13, 2017: THIS is a Revenue appeal against the order dated 29.10.2015 - 2016-TIOL-646-CESTAT-DEL of the CESTAT setting aside the order of the Appellate Authority rejecting the petitioner's claim for refund.

We reported this order thus -

ST - Refund - Orders of first appellate authority are crystal clear in setting aside rejection of refund claim - Original authority was merely required to implement direction relating to consequential relief but authority took it on himself to sit in judgment of higher appellate authority by issue of a fresh notice for rejection on ground of limitation without applying his mind to scope of his authority, extant legal provision and importance of judicial discipline in taxation - Egregious act of indiscipline and impropriety on part of refund sanctioning authority has compelled assessee to traverse needlessly once more through appellate process and has also added to burden of an over-burdened appellate mechanism - Impugned order set aside and also imposed a cost of Rs. 10,000/- on Deputy Commissioner: CESTAT

Before the High Court, Revenue contends that the following substantial questions of law arise -

i) Whether the action of adjudicating authority in following the procedure established by law with regard to disbursal of refund amount from govt. exchequer is proper and in accordance with law?

ii) Whether the impugned order dated 29.10.2015, is perverse, illegal and untenable in the eyes of law and the same is therefore liable to be set aside?

iii) Whether the Ld. Tribunal committed an error in ignoring that the application for refund filed by the respondent/assessee was in fact barred by limitation and therefore the order dated 16.11.2001, Annexure A-2, was nullity in eyes of law?

iv) Whether the adjudicating authority was not empowered to consider that the refund claim application was barred by limitation?

v) Whether CESTAT is empowered to impose cost on the adjudicating authority ?

The High Court held that the first four questions do not raise substantial questions of law since -

+ The Assessing Authority had rejected the respondent's/assessee's application for refund. The petitioner's appeal against the same was allowed by the order of the Appellate Authority dated 16.11.2001. That order has attained finality. The same was not challenged by the appellant/revenue.

+ Despite the same, the Assessing Authority rejected the application for refund on the ground that it was barred by limitation under Section 11-B of the Central Excise Act, 1944. The Assessing Authority could not have done so in view of the said order of the Appellate Authority. It was bound by and ought to have complied with the same.

+ The respondent, however, filed an appeal for refund under Section 11-B of the Act, which was not necessary in view of the order of the Appellate Authority which had attained finality. The Commissioner (Appeals) also by mistake considered the appeal independently and by an order dated 31.03.2009, rejected the appeal. The Tribunal allowed the appeal against this order. The amount, in any event, has already been received by the respondent.

As regards the last question - Whether CESTAT is empowered to impose cost on the adjudicating authority ?, the High Court observed -

"…The Tribunal has imposed a cost of Rs.10,000/- on the Assessing Officer personally for not having complied with the said order of the Appellate Authority dated 16.11.2001. There do not appear to be any mala fides on the part of the Officer. He passed an order which is incorrect. A mere incorrect order ought not to invite penal consequences if made bona fide."

In fine, the Revenue appeal was admitted in respect of the question (v) and the same was answered in favour. The order of imposition of cost against the Officer was set aside.

The appeal was disposed of.

In passing: Also refer Can Tribunal Impose Costs on Adjudicating Authority? & DDT 2315 & 2016-TIOL-1055-HC-P&H-ST.

(See 2017-TIOL-720-HC-P&H-ST )