SC rules application for refund of self-assessed duty without appeal is not maintainable

This Tax Alert summarizes a recent ruling of the Supreme Court (SC)^[1]. The issue before the court was that in absence of any challenge to the order of assessment under Customs and Central Excise, whether refund application against the assessed duty can be entertained.

Addressing the appeal in respect of the refund claim of countervailing duty/excise duty erroneously paid, SC held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings.

The key observations of SC are:

·         Endorsement made on bill of entry is an order of assessment. It cannot be said that there is no order of assessment passed in such a case.

·         The order of self-assessment is appealable by any person aggrieved. Thus, Revenue as well as assessee can prefer the appeal.

·         While processing a refund application, re-assessment is not permitted. Further, conditions of exemption cannot be adjudicated by the refund authority.

SC concluded that if a person is aggrieved by any order which would include self-assessment, he has to get the order modified by filing an appeal or through other provisions of the relevant Act.

Basis the apex court’s ruling, the taxpayers desirous to claim refund of tax erroneously paid, may consider the option of amending bill of entry or returns, approaching Revenue for re-assessment or filing an appeal before the Appellate Authority, depending on facts and circumstances.

In cases where time limit to file an appeal has lapsed, the authority should consider condoning such delay by accepting the appeal and issuing the order to facilitate taxpayer to claim refund of such duty/tax.

While the ruling deals with customs and excise, its impact under GST needs to be analyzed taking into consideration the assessment, refund and other relevant provisions of the law.