Unjust Enrichment Shall Not Be Applicable To Refund Of Pre-Deposit – CESTAT Mumbai

The Hon’ble CESTAT Mumbai vide its order dated 16.06.2022 in the matter of M/s Chowgule Industries Pvt. Ltd. Vs. Commissioner of CGST & Central Excise, Pune – I in Service Tax Appeal No. 88473 of 2018, held that unjust enrichment would not be applicable on the amount deposited as pre-deposit to acquire right of appeal.  Such payment being made under protest in compliance of the statutory requirement, refund for the same, cannot denied on the ground that it is hit by the doctrine of unjust enrichment.

The Appellant in the present appeal has assailed the order of rejection of refund of pre-deposit made in compliance of Section 35F, against the order-in-original confirming demand of tax, interest and penalty on him, to pursue appeal before the CESTAT.

Facts:

  • The Appellant is engaged in the trading of cars and is an authorized dealer of Maruti Udyog Ltd. That as per the dealership agreement, the Appellant is bound to provide the first free servicing to the customers who purchased car from it.
  • It appears that two show cause notices were issued to the appellant for the period October, 2006 and November, 2006 on the ground that first free service was a part of the Appellant’s trading margin from Maruti Udyog, and also on handling charges, on which it is already paying VAT.
  • The demand proposed in the aforesaid show cause notices was later on confirmed in the order-in-original during the adjudication process to the tune of Rs. 11,11,997/- with equivalent penalty under Section 78 and interest under Section 75. Further in compliance of Section 35F, the Appellant made payment towards pre-deposit and filed an appeal before Commissioner (Appeals) however, no relief was granted.
  • That against the said order of Commissioner (Appeals), the Appellant preferred an appeal before the Hon’ble CESTAT and got the desired relief vide the tribunal’s order dated 26.08.2015.
  • The appellant then, filed a refund of the amount deposited a pre-deposit against the Order-in-Original in compliance of Section 35F. However, the said refund was rejected through an adjudication order and later on by Commissioner of Central Tax (Appeals-II) vide order dated 10.05.2018, upholding the order-in-original wherein the amount of Rs. 21,26,143/- was sanctioned under Section 11B and ordered to be transferred to Consumer Welfare Fund on the ground that the Appellant has failed to prove that the there is no unjust enrichment. Being aggrieved of this order, the appellant is before the Tribunal in appeal.

 

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