Court holds that pre-deposit for appeal is not payment of duty under Central Excise Act, directs refund of Rs.1,24,175/- with 12% interest and Rs.25,000/- litigation costs; reprimands department for lack of bona fide action
In a significant judgment delivered on September 28, 2026, the Patna High Court (Division Bench comprising Justices Rajeev Ranjan Prasad and Sunil Dutta Mishra) ruled in favor of Shashi Kant Singh, who had approached the Court seeking refund of a pre-deposit amount paid twice due to a technical glitch in the ICEGATE portal. The petitioner had deposited Rs.1,24,175/- twice as a mandatory pre-deposit to file an appeal against a service tax demand order before the Commissioner (Appeals), Customs, Central GST & Central Excise, Patna.
The petitioner's grievance arose when the first payment, made through SBI Internet Banking, was debited from his account but no confirmation was received due to a portal error message stating "client does not exist ICEGATE. Bank provides wrong client ID." In fear of missing the deadline, the petitioner remitted the same amount again via RTGS. Both payments were credited to the department's account; however, the department refused to refund the duplicate amount despite repeated complaints and grievances raised by the petitioner.
The department contended that Section 11B of the Central Excise Act, 1944, which governs refund of excise duty, should apply to the case and that the petitioner ought to have filed an application under the said provision. However, the Court disagreed. It observed that the pre-deposit made for availing the right to appeal is not a payment of duty itself. Relying on the Supreme Court's decision in Union of India v. Suvidhe Ltd. (2016) 11 SCC 808 and the departmental Circular No.984/08/2014-CX, the Court held that Section 11B does not apply to pre-deposit refunds under Section 35F of the Central Excise Act.
Finding that the department had not acted bona fide by retaining the duplicate payment and unnecessarily forcing the petitioner to approach the Court, the bench directed the respondents to refund the excess amount of Rs.1,24,175/- along with interest at 12% per annum from the date of second receipt till the date of payment. Additionally, the Court imposed litigation costs of Rs.25,000/- payable by the respondents to the petitioner. The Court further ordered that the interest and costs awarded shall be recoverable from the erring officials responsible for the delay.
This judgment underscores the principle that pre-deposits for appeals are distinct from payment of duty and any erroneous duplicate payments must be refunded promptly with interest to prevent misuse of public funds and harassment of taxpayers. It also signals the judiciary's intolerance towards departmental lethargy and lack of bona fide in resolving refund claims.
Bottom Line:
Central Excise/Service Tax - Amount deposited as pre-deposit for filing appeal, if paid twice due to portal/payment error, is refundable in writ jurisdiction - Such pre-deposit is not payment of duty and Section 11B of Central Excise Act, 1944 is not applicable - Department directed to refund excess amount with interest and litigation costs.
Statutory provision(s):
Central Excise Act, 1944 - Sections 11B, 35F
Shashi Kant Singh v. Union of India, (Patna)(DB) : Law Finder Doc Id # 2990700
