Calcutta High Court
Ipsen Technologies Private Limited vs Commissioner Of Cgst And Cx Kolkata ... on 21 May, 2025
Author: T.S Sivagnanam
Bench: T.S Sivagnanam
OD-18
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (CENTRAL EXCISE)
ORIGINAL SIDE
CEXA/13/2025
IA No. GA/1/2025
IPSEN TECHNOLOGIES PRIVATE LIMITED
VS
COMMISSIONER OF CGST AND CX KOLKATA SOUTH COMMISSIONERATE
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM
-A N D-
HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)
DATE : 21st May, 2025.
Appearance:
Mr. Dipankar Majumdar, Adv.
Mr. Sarangam Chakraborty, Adv.
Ms. Deblina Chattaraj, Adv.
Ms. Aishi Pal, Adv.
...for the appellant.
Mr. Bhaskar Prosad Banerjee, Adv.
Mr. Kaustav Kanti Maity, Adv.
... for the respondent.
The Court : This appeal has been filed by the assessee under Section
35G of the Central Excise Act, 1944 (the Act) challenging the order passed
by the learned Customs, Excise & Service Tax Appellate Tribunal (Tribunal),
Eastern Zonal Bench, Kolkata in Service Tax Appeal No. 75798 of 2024
dated 04.09.2024 and the rectification order in Service Tax (ROM)
Application No.75650 of 2024 dated 11.02.2025.
The assessee has raised the following substantial questions of law for
consideration:
I) Whether the Learned Tribunal erred in law as well as in fact in
not appreciating that in cases where refund of tax is sought for
tax paid under Reverse Charge Mechanism the question of unjust
enrichment does not arise ?
II) Whether the Learned Tribunal erred in law as well as facts by
expanding the scope of dispute before itself in respect of issues,
which were never raised in the underlying show cause notice ?
III) Whether the Learned Tribunal erred in law as well as fact by
reminding the case of the appellant to the adjudicating Authority
for determination of the issued of is enrichment, even though the
refund prayed by the appellant was allowed ?
IV) Whether the Learned Tribunal erred in law as well as fact while
passing the rectification order by disallowing the prayer of the
appellant for modification of the operative portion of the order,
despite recording of existence of factual errors at the time of
passing the final order ?
We have heard Mr. Dipankar Majumdar, learned Counsel appearing
for the appellant/assessee and Mr. Bhaskar Prosad Banerjee, learned
standing Counsel assisted by Mr. Kaustav Kanti Maity, learned Advocate for
the respondent/revenue.
The assessee preferred the appeal before the Tribunal challenging the
order passed by the Commissioner of CGST & CX, Kolkata, Appeal-I dated
06.12.2023 by which the Commissioner of Appeals affirmed the Order-in-
original dated 28.02.2019.
By the said Order-in-original, the Adjudicating authority rejected the
appellant's claim for refund for violation and mis-interpretation of Circular
No. 207/5/2017- Service Tax dated 28th September, 2017 read with Section
142(9)(b) of CGST Act, 2017, Rule 7 of the Point of Taxation Rules, 2011 and
Rule 7B of the Service Tax Rules, 1994. The provision envisaged under
Section 174 of the CGST Act, 2017 was also made applicable to the said
order. The Appellate authority concurred with the view taken by the
Adjudicating authority and rejected the appeal. The correctness of these
orders was questioned before the learned Tribunal.
The assessee relied upon Circular No.341/34/2010-TRU dated 31st
March, 2011 where the applicable point of taxation has been illustrated by
way of an example in respect of cases where part payments were made for
receipt of services. The assessee also contended that the Circular dated 28 th
September, 2017 was issued to clarify the position as to the details of credit
arising out of service tax paid under reverse charge mechanism after 30th
June, 2017 would be reflected in the service tax return in the transitional
forms under GST. Further, the assessee contended that the service tax paid
under reverse charge mechanism was eligible credit and the same was
indefeasible in nature and in this regard placed reliance on the decision of
the Hon'ble Supreme Court in the case of Collector of Central Excise, Pune
vs. Dai Ichi Karkaria Ltd., 1999 (112) ELT 353 (SC). Further, the assessee
contended that they are eligible for refund of CENVAT Credit as claimed in
its refund application in terms of Section 142(9)(b) of the CGST Act, which
makes it apparent that upon fulfilling the conditions listed hereunder the
amount which is in the nature of admissible CENVAT Credit or which is
refundable, the same becomes refundable in cash under the existing law
notwithstanding anything to the contrary contained in the said law other
than the provisions of sub-Section 2 of Section 1B of the Central Excise Act,
1944. An alternate submission was also made that their refund claim is also
eligible to be allowed in terms of Section 142(3) of the CGST Act. The
grounds canvassed by the assessee did not find favour with the Appellate
Authority who rejected the appeal which was put to challenge before the
learned Tribunal. The learned Tribunal accepted the case of the assessee
and in doing so followed the decision of the co-ordinate Bench of the
Tribunal in M/s. Circor Flow Technologies India Private Ltd. vs. The
Principal Commissioner of GST & Central Excise, Coimbatore [(2022-VIL-15-
CESTAT-CHE-ST)];, and OSI Systems Pvt. Ltd. vs. CCT Rangareddy [2022
(9) TMI 801-CESTAT Hyderabad]. In the order passed by the learned
Tribunal dated 4.9.2024, the relevant paragraph of the above two judgments
were extracted and agreed with the contentions raised by the appellant that
the decision in OSI Systems Pvt. Ltd. would be applicable to the assessee's
case. But however, in the penultimate paragraph of the order dated
4.9.2024, the learned Tribunal while setting aside the order and allowing the
appeal, remanded the matter to the Adjudicating authority for the purpose
of considering whether there is a bar of unjust enrichment. To be noted that
this plea of unjust enrichment was never the case of the department as
could be seen from the show cause notice as well as the order of admission
and the order passed by the Appellate Authority. The mistake occurred on
account of the fact that while extracting the decision in the case of OSI
Systems Pvt. Ltd., the word "no" before the word "unjust enrichment" was
omitted. Consequently, the Tribunal appears to have been of the view that
the only point to be considered is whether the word "unjust enrichment" is
applicable. Having noted the error, the assessee filed an application for
rectification of the order dated 4.9.2024. The applicant pointed out two
errors which are apparent on the face of the order passed by the learned
Tribunal dated 4.9.2024. The first being that the Tribunal has observed that
the assessee paid the license fees on 17th March, 2017 when the erstwhile
provisions of service tax was in force but reversed the credit on 26th
September and October, 2017. This finding, according to the assessee, was
erroneous since the service tax paid subsequently to the implementation of
GST of which refund was sought for was paid by the assessee under reverse
charge mechanism and therefore, what was recorded by the learned
Tribunal was factually incorrect. The next error which was pointed out was
the omission of the word "no" in the extracted portion of the decision in the
case of OSI Systems Pvt. Ltd. The said application for rectification was
considered by the Tribunal and the case of the assessee was accepted and
the word "no" was inserted in paragraph 3.1 of the order passed by the
learned Tribunal dated 11.2.2025. In the rectification application another
prayer was made by the assessee to grant refund without subjecting the
assessee for further verification by the adjudicating authority. This prayer
was rejected by the learned Tribunal in paragraph 4 of the order dated
11.2.2025. Therefore, the assessee is on appeal.
The learned Tribunal having accepted the fact that there is an error
apparent on the face of the order inasmuch as the word "no" was missed out
while extracting the relevant portion of the decision in the case of OSI
Systems Pvt. Ltd., the Tribunal ought to have noted that the consequence
thereof would be to allow the appeal of the assessee and direct the
Adjudicating authority to grant refund within a time-frame. In fact, the
factual position in OSI Systems Pvt. Ltd., is identical to that of the case of
the assessee. Therefore, the conclusion of the learned Tribunal that the
assessee sought for modification of the earlier order dated 4.9.2024 is
incorrect since if the word "no" is inserted in the appropriate place then the
judgment in OSI Systems Pvt. Ltd. will fully apply to the facts and
circumstances of the assessee's case and consequently, they would be
entitled for refund.
In the light of the above, the appeal filed by the assessee is allowed
and the order passed by the learned Tribunal is set aside and the
substantial questions of law are answered in favour of the assessee and the
Adjudicating authority is directed to grant refund within a period of 60(sixty)
days from the date of receipt of the server copy of this order.
The stay petition (GA/1/2025) also stands allowed.
(T.S. SIVAGNANAM)
CHIEF JUSTICE
(CHAITALI CHATTERJEE (DAS), J.)
spal/mg/SM
