Page No.# 1/8 GAHC010112912021 undefined THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/3553/2021 M/S CHEMICAL AND PETRO CHEMICAL INDUSTRIES H.B. ROAD MACHKHOWA, GUWAHATI, DIST. KAMRUP (M) ASSAM, HAVING ITS REGISTERED OFFICE H.B. ROAD, MACHKHOWA, GUWAHATI- 09 DIST. KAMRUP (M) ASSAM, AND FACTORY AT IGC CHAYGAON, P.S. BOKO, DIST. KAMRUP, ASSAM, REP. BY MR. BIJU VARGHESE VERSUS THE UNION OF INDIA AND 3 ORS THROUGH THE FINANCE SECRETARY MINISTRY OF FINANCE, HAVING ITS OFFICE AT NORTH BLOCK, NEW DELHI-110001 2:THE COMMISSIONER CENTRAL GOODS AND SERVICE TAX GUWAHATI O/O THE CENTRAL GOODS AND SERVICE TAX GUWAHATI ASSAM 3:THE ASSISTANT COMMISSIONER CENTRAL GOODS AND SERVICE TAX CENTRAL GST DIVISION GST BHAWAN KEDAR ROAD GUWAHATI-78101 ASSAM 4:THE PRINCIPAL COMMISSIONER CENTRAL GOODS AND SERVICE TAX GST BHAWAN KEDAR ROAD GUWAHATI ASSA Page No.# 2/8 Advocate for the Petitioner : MR I UDDIN, MS K DEKA,MR. R DE,MR. B SARMAH,MR I Y ALI Advocate for the Respondent : SC, GST, BEFORE HONOURABLE MR. JUSTICE SOUMITRA SAIKIA ORDER 16.10.2025 Heard Mr. B Sarmah, learned counsel for the petitioner. Also heard Mr. S.C. Keyal, learned Standing Counsel, GST. 2. The petitioner before this Court is a Partnership firm having its factory at IGC Chaygaon, P.S Boko, District Kamrup, Assam. The petitioner has its registered office at Machkhowa, Guwahati-09. The petitioner is engaged in manufacturing phenyl including other toilet preparations products, liquid soap, allied products along with other allied toilets cleaning products etc. from the factory unit located at its Industrial Unit at Chaygaon. Petitioner is represented by its authorized signatory, who is the registered firm. 3. Petitioner in the present proceeding has challenged the demand-cum- recovery notice dated 02.07.2021, whereby the respondent- Central Excise Department has demanded recovery of ₹1,10,19,633/- along with applicable rates of interest thereon in pursuant to the judgment of the Apex Court rendered in the matter of Union of India & Anr. Vs. M/S VVF Ltd & Anr in C.A No. 2256/2263 of 2020. 4. The short case projected before this Court is that these refunds made to the petitioner were on the basis of orders passed by the Gauhati High Court. Therefore, the respondent authority cannot seek to recover any amount by way Page No.# 3/8 of the impugned demand notice without putting the petitioner to prior notice thereto. 5. It is submitted that these refunds were made pursuant to a direction of the Supreme Court in an interim application filed by the Union to refund 50% of the amount payable as refund, subject to surity bond being executed by the recipients, including the petitioner. According to the petitioner that under the Industrial Policy, on the basis of the exemption notifications issued, petitioner was entitled to refund, and which notifications were sought to be taken away,leading to series of litigations before the High Court, which ultimately culminated in the judgment of the apex Court in order of M/S VVF Limited (Supra), whereby the Apex Court upheld the steps taken by the respondents to withdraw the notification and were held to be valid. Nevertheless, it is the submission of the petitioner that the refunds made to the petitioner were payable to be till 2018-19, and if the same is calculated up to the date of 31st of March 2021, then the same shall be increased and therefore, contrary to the recovery of the amounts sought to be made from the petitioner, the petitioner would be entitled to further refund. It is also the claim of the petitioner that since the refunds made to the petitioner were pursuant to specific orders passed by by the court, the same cannot be made recoverable without following the due procedure prescribed under the provisions of the Act. The judgment of the apex Court in M/S VVF Limited (Supra) would not ipso facto entitle the respondent authorities to seek automatic recovery from the petitioner of the refund amount which were granted by passing specific orders by the Central Excise Authorities in terms of such specific orders granted by the Gauhati High Court. 6. The learned counsel for the respondents strongly the objects to the Page No.# 4/8 submissions made. It is submitted that in terms of the refunds granted to other similarly situated persons as per the liberty granted by the apex Court of refunding 50% of the claim subject to surety being executed. 7. The assesses including the petitioner duly executed a bond wherein there is a clear provision that upon any demand by any authority appointed by the government under the Central Excise Act and Rules, such demand to be in writing and be served upon the person executing the bond would be liable to be returned. It is, therefore, submitted that there is no infirmity in the demand notice issued to the petitioners and they are liable to pay the demand in view of the undertaking given by way of the surety bond. 8. At the outset, it is seen that the petitioner has set up its industry in terms of the Industrial Policy offered by the government. Under the various notifications issued, notifications issued, exemptions were also granted. The learned counsel for the parties have been heard. Pleading available on record have been carefully perused. The Judgments pressed into service have also been perused. 9. Under Section 11(A)(1) of the Central Excise Act, recovery of duties erroneously refunded other than the reason of fraud or collusion or willful misstatement or suppression is provided for under the said Section. 10. Under Section 11(A) of the Central Excise Act, where the Central Excise Officer is of the opinion that such duty has been erroneously refunded then a notice has to be issued requiring the person to show cause as to why they should not pay the amount specified in the notice. The relevant portion of the Act is extracted below: “11A. Recovery of duties not levied or not paid or short-levied or short-paod or Page No.# 5/8 erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within 2 two years] from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,- (i) his own ascertainment of such duty; or (ii) the duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA” 11. Admittedly, in the present proceedings, no notice has been issued prior to the issuance of the demand notice dated 02.07.2021. The prescription of the Act under Section 11A is very clear that where the Central Excise Officer is of the opinion that the amount has been refunded erroneously then a show cause has to be issued as to why the amount specified in the notice should not be paid. 12. In the demand notice dated 02.07.2021, the respondent department has proceeded to demand and recover the excess amount of refund sanctioned on the basis of the interim order of the Apex Court dated 07.12.2015 in I.A No. 3 of 2015 in view of the judgment rendered by the Apex Court in M/S VVF Limited (supra). The demand notice clearly reflects the manner in which the refund was made to the petitioner. There was an order passed by the apex Court vide order dated 07.12.2015 in I.A No. 3 of 2015 directing respondents to refund 50% of the claims. This was followed by an order dated 01.12.2016 passed by the Gauhati High Court in WP(C) No. 269/2016 [Raj Coke Industries Vs. Union of India and ors]. In compliance with the orders passed by the Apex Court and the Page No.# 6/8 Gauhati High Court and upon furnishing solvent security and undertaking, the amount now sought to be recovered from the petitioner was refunded by the respondent authorities. It is also seen that the petitioner did not file any application before the Apex Court or before the High Court. Nevertheless, the respondent authority made the partial refund as similar refunds were made to various claimants and assesses in pursuance to the orders passed by the Apex Court and the Gauhati High Court. Even a perusal of the Judgment of Apex Court In M/S VVF Limited (Supra) does not reflect that the appellant before the court, namely the Central Excise Department, was given liberty to proceed for recovery of the amounts earlier refunded by the department on the strength of the judgment of the Apex Court. 13. The Central Excise Act, 1944 is a complete code in itself and any procedure prescribed by the statute, more particularly in revenue matters, must be diligently followed. 14. There is no explanation in the demand notice as to why the show cause notice contemplated under Section 11(A)(1) was not issued. The only explanation is that since the petitioners was given the refund on the basis of the undertakings submitted and in the undertaking submitted, it was provided that the petitioners, will refund the amount as and when demanded. However, the revenue authorities are mandatorily required to prescribe the provisions of the Act and the Statutes. It is a well-established law that an Act must be done in the manner which is prescribed, or not done at all [Commissioner of Police vs. Gordhandas Bhanji reported in 1951 SCC 1088]. Therefore, merely because the undertaking was given by the petitioner wherein there is a clause that upon demand this amount should be refunded back, the fact remains that in the absence of any specific adjudication either by the Apex Court or the Guwahati Page No.# 7/8 High Court in respect of the present petitioner, the Central Excise Authorities being quasi-judicial authorities, they were required to arrive at a finding that the refund granted to the petitioner on the strength of the undertaking given was erroneously refunded, and the same is required to be recovered by following the procedure prescribed under the Central Excise Act, namely by issuance of a show cause notice. The finding to be arrived at by the Central Excise Authority must be pursuant to the show-cause notice required to be issued to the assessee as prescribed under Section 11 A (1). These procedures prescribed by the statute have not been followed by the respondents. The relevant paragraph of the Judgment of Gordhandas Bhanji (Supra) is extracted below: “9. An attempt was made by referring to the Commissioner's affidavit to show that this was really an order of cancellation made by him and that the order was his order and not that of the Government. We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” 15. Under such circumstances, it is clear that the respondent authorities cannot proceed to recover the refunds by issuing a demand cum recovery notice without following the procedure prescribed under Section 11(A)(1), notwithstanding the undertaking given by the petitioner. According to this court, there has to be a conclusion arrived at by the respondent authorities that the partial refund granted was erroneously refunded and therefore is liable to be recovered under procedure prescribed under Section 11A and the steps prescribed thereunder should be followed. 16. In view of the above discussion, the petition is allowed. The impugned demand cum notice is hereby interfered with and set aside. Interim order Page No.# 8/8 passed stands merged. 17. The respondent, however, are at liberty to proceed against the petitioner by following the due process of law as prescribed under the Statute JUDGE Comparing Assistant