In what could spell trouble for an assistant commissioner at the Central Excise and Service Tax department in Surat, the Gujarat high court on Monday ordered a penalty of Rs 1 lakh on the responsible officer payable to a company for he had passed an order on ‘extra legal reasons’.
The HC was so taken aback by the actions of the officer that it ordered 18% interest per annum to be paid for the delay in issuing refund of Rs 3.6 crore and the extra amount recovered from the responsible officer. Besides ordering the department to issue full refund with 6% interest to the company within 24 hours, the HC ordered authorities to hold an inquiry to pin responsibility on the concerned officer and recover the extra amount as well as Rs 1 lakh litigation cost from the officer and pay the sum to the litigant company. In this case, Century Copper Rod Pvt Ltd and one of its directors Mohammed Zenulbhai Vasi had won a case against the department in the Central Excise and Service Tax Appellant Tribunal (CESTAT) in May 2019. The tribunal had ordered the Central Excise and Service Tax Divison-II in Surat to issue refund of Rs 3.6 crore to the company.
Even after the tribunal’s order, the assistant commissioner in August 2019 said that though the company was entitled to the refund, the amount was deposited with the Consumer Welfare Fund and not given to the company. The company and its director appealed against this order before the commissioner and the order was quashed. The assistant commissioner was asked to process the refund, but the company did not get its money till July 2020.
The company moved the HC and complained about the department’s behaviour. Upon inquiry, the government admitted that the refund was not paid to the company. However, it was contended that the department had challenged the May 2019 order for refund before the high court in February. The authorities’ attitude irked the high court and the bench of Chief Justice Vikram Nath and Justice J B Pardiwala asked how could the officer withhold the amount on an assumption that there could be any legal development in future in this case. They said, “In fact, we are convinced that the amount has been withheld by the assistant commissioner for extra legal reasons.”