Shashi Kant Singh v. The Union of India

What happened

Shashi Kant Singh was aggrieved by an order of 14 September 2022 of the Joint Commissioner, CGST and Central Excise, Patna-1 confirming service tax and cesses of ₹16,55,665, and appealed to the Commissioner (Appeals) on 14 November 2022. To pay the pre-deposit of 7.5% he paid a sum through the ICEGATE portal by State Bank of India internet banking on 16 June 2023, the amount was debited from his account, but the portal showed a message that the client did not exist and gave no acknowledgement. The helpline said that the payment would be refunded within 72 hours, but he received no acknowledgement and the last date for the pre-deposit was approaching, so he made a second payment of the same amount by RTGS on the same date. Both payments were credited to the department's account, but a complaint on the public grievance portal received the reply that the amount had not been received from the bank's end. He asked for refund of ₹1,24,175 with interest at 18%.

Questions before the court

• Is a duplicate pre-deposit for an appeal refundable under section 11B of the Central Excise Act, or must it be refunded on proof of double payment?

Why the court ruled this way

The department filed a counter affidavit relying on section 11B of the Central Excise Act, 1944, as made applicable to service tax refunds, and argued that the petitioner should have applied under that provision. The Court held that on a plain reading section 11B, which opens with a claim for refund of duty and interest paid on it, does not apply. It relied on CBEC Circular No. 984/08/2014-CX dated 16 September 2014 and the Supreme Court's decision in Union of India v. Suvidhe Ltd. (2016) 11 SCC 808, which hold that a pre-deposit is not a payment of duty but only the condition for availing the right of appeal, so section 11B can never apply to a deposit under section 35F (paragraph 11). The department had not shown its bona fides by keeping the matter pending, since it ought to have refunded the money at once on finding the complaint, and had no answer to the circular and the decision (paragraphs 10 and 12).

Controlling point

A pre-deposit made to file an appeal is not a payment of duty, so section 11B does not govern its refund, and a duplicate pre-deposit retained after proof of double payment must be refunded with interest, with the cost of forcing the payer to litigate.

Order and next steps

The respondents 2 to 4 must refund ₹1,24,175 with interest at 12% per annum from the date of the second receipt until payment within four weeks. Because the petitioner had been unnecessarily compelled to approach the Court and the department did not take a bona fide plea, costs of ₹25,000 were also to be paid within the same period. The respondents may find out at whose level the matter remained pending and recover the interest and costs from the erring officials. The application was allowed.

Practical implications

A taxpayer who pays an appeal pre-deposit twice should record the transaction details and the grievance complaints, and ask for refund of the duplicate quoting the circular and the Supreme Court's decision in Suvidhe. The refund of a pre-deposit does not require a section 11B application.

Limits of this ruling

• The relief rests on the admitted double payment and the department's inaction; the Court did not decide the underlying service tax demand.