Apppellate authority may examine entire facts with refrence, HC

Facts in Brief:

1. The appellant came in appeal against order-in-appeal dated 29-3-2004 which held that M/s. ICI India Ltd. had acted as a clearing and forwarding agent of the appellant and service tax paid by the appellant was as a person who engaged M/s. ICI (India) Ltd. as their clearing and forwarding agent and such payment was legal and correct for which no refund of tax so paid arose. While doing so, the impugned order upheld order of Adjudication dated 10-6-2003 which rejected refund claim of Rs. 64,94,422/- of this Appellant.

HC held as under,

2. The appellant filed a refund claim of service tax paid in relation to the goods transport operators and clearing and forwarding agents in pursuance to the decision of the Hon'ble Supreme Court in the case of Laghu Udyog Bharti v. Union of India reported at. During the pendency of the refund claim, the provisions of the law were revalidated retrospectively by Section 117 of Finance Act, 2000. In view of the revalidation Act, the levy of service tax, during the relevant period, is a valid levy. The Commissioner (Appeals) followed the decision of the Tribunal in the case of Hindalco Industries Ltd. and Anr. v. C.C.E. reported in 2003 (58) R.L.T. 578. In view of the above decisions, we find no infirmity in the impugned order, the appeals are dismissed.

3. It may be appreciated that granting refund by Administrative authority in respect of taxes realized by mistake is nothing impermissible in view of judgment of Hon'ble High Court of Allahabad in the case of Prism Cement Limited v. Union of India 2006 (2) S.T.R. 291 (Allahabad). The Hon'ble Court held that the judgment in Mafatlal Industries Ltd. v. Union of India, has not denied administrative justice. The Hon'ble Court in para 3 of the judgment to held as under:

4. The judgment cannot be read to mean that the appropriate authority under the Central Excise Act or the Customs Act cannot grant a refund, even though the payment was made by mistake or the amount was recovered illegally except in a suit Court issues decree or in a writ petition filed by the claimant of the High Court issues an appropriate writ in the matter. The proposition laid down by the Hon'ble Supreme Court seems to be that if the appropriate authority does not grant the refund the remedy of the person concerned is to file a suit or writ. The Hon'ble Supreme Court could not have intended that the department concerned should withhold the amount which a claimant is entitled to receive, and drive the claimant to litigation.

5. In view of the aforesaid position of law stated by us, the learned Appellate Authority may examine entire fact with reference to agreement between the parties and real nature of arrangement by them with the law of the land and come to a conclusion whether the ICI India Ltd. was a clearing and forwarding agent and incidence of tax may be decided accordingly. Of course if the Authority come to conclusion that there shall not be liability, refund if any that may arise may be subject to test of principles of unjust enrichment if the facts and circumstances so warrant.

6. In the result, the appeal is allowed by remand. 

Case Reference - Initiating Explosives Systems vs Commissioner Of C. Ex.