M/S Rajasthan Financial Corporation V. Commissioner Of CGST, Jaipur in Service Tax Appeal No. 50007 of 2022 ( CESTAT – Delhi)

Unjust enrichment not applicable to the refund of penalty

The Hon’ble CESTAT Delhi vide its order dated 11th April 2022 in the matter of M/S Rajasthan Financial Corporation Versus Commissioner Of CGST, Jaipur in Service Tax Appeal No. 50007 of 2022 held that the bar of unjust enrichment is not applicable to the refund of penalty.

Appellant’s Submissions:

  • It was submitted on the behalf of the Appellant that there is no such provision in law wherein the appellant is required to pass the bar of unjust enrichment for refund of penalty.
  • The Appellant further relying on Commissioner of Customs (Import), Mumbai vs. Be Office Automation Pvt Ltd. 2016 (334) ELT 158 Tri- Mum), Anand Silk Mills vs. Commissioner of Customs (Import) Nhava Sheva-2010-TIOL-570- CESTATMUM, Ratan Udyog vs. Commissioner of Cus. (Acc & Export), Mumbai-2014 (313) ELT 764 (Tri – Mum) & Bombay High Court decision in the matter of United Spirits Ld. Vs. Commissioner of Customs (Import), Mumbai-2009(240) ELT 513 (Bom)., prayed for setting aside the impugned order of rejection of refund.

On the other hand, the learned authorised representative for the Department supported the impugned order.

Held:

  • The Hon’ble CESTAT after considering the submissions made from the both sides and examining the impugned order observed that the Ld. Commissioner (Appeals) failed to appreciate the facts as the refund in present case is of penalty not of duty.
  • Further, there is no provision in law where the appellant is required to pass the bar of unjust enrichment for claiming the refund of penalty.
  • Thereafter the Hon’ble Bench following the decisions of the Tribunal in the case of Be Office Automation Pvt Ltd., Anand Silk Mills vs. Commissioner of Customs (Import) Nhava Sheva, Ratan Udyog vs. Commissioner of Cus. (Acc & Export), Mumbai, held that bar of unjust enrichment is not applicable to the facts of the case.

The Hon’ble Bench with the following findings set aside the impugned order and allowed the appeal with consequential relief.

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