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CX/GST–Costs imposed on Revenue to impress upon Authorities that proceedings before High Court should not be delayed; upon enactment of CGST Act, issue is purely academic and rendered infructuous - order recalled; amount returned: HC

Published: Mar 12, 2018

By TIOL News Service

MUMBAI, MAR 12, 2018: IN the matter of the Writ Petition filed by the petitioner in the year 2016, an affidavit-in-reply came to be filed by the Respondent department.

Para 10 of this affidavit-in-reply reads as under :-

"10. As mentioned at Para 7 above Revision application filed by Petitioner pertaining to protective demand show cause notices are pending with Revision Authority. If the petitioner succeeds then amount of Rs.5,07,59,409/- included in eight Rebate orders sanctioned by Deputy Commissioner (Rebate) that is already with the Petitioner gets approval of Revision Authority and no further action will be taken by the department for recovery of said amount. However, if the Petitioner fails then the Petitioner is required to pay Rs.5,07,59,409/- to the department and claim equivalent amount as credit. But in view of Section 142(3) of CGST Act, 2017, this amount is to be paid in cash. Thus, even if Petitioner fails no action will be taken by the department for recovery of said amount in view of enactment of transitional provisions under the CGST Act. Hence there is no gain to either the petitioner or the department in the subject proceeding and the writ petition may please be dismissed.”

Section 142(3) of the CGST Act, 2017 reads –

(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944:  (1 of 1944.)

Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:

Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

The Petitioner, therefore, submits that in the light of the affidavit-in-reply filed by the Respondents and particularly the statement in paragraph No. 10, the issue raised in this Petition is rendered academic.

The High Court noted that on account of the subsequent development and particularly the Central Goods and Services Tax Act, the issue in the Petition is purely academic and it is rendered infructuous.

Consequently, the High Court recalled its earlier order imposing costs of Rs.25,000/- on the Respondents (and which had been duly complied with).

The High Court further observed –

“…It was not an order passed merely because the Court was upset with the Respondents or because of the absence of the advocates, but it is clear from the order that it was to impress upon the Authorities that the proceedings before this Court should not be delayed.

5. By delay, the larger Public Interest suffers and that was not present to the mind of the Authorities and it is only to remind them of the duties and obligations to the public, that costs were imposed. On account of the fair stand of the Petitioner and Mr. Sridharan, we direct that the amount paid of Rs.25,000/- be returned to the Respondents.”

The Writ Petition was disposed of without costs.

(See 2018-TIOL-18-HC-MUM-GST)