Case Summary
Case Title: Ipsen Technologies Private Limited vs Commissioner of CGST & CX, Kolkata South Commissionerate
Court: High Court at Calcutta (Special Jurisdiction – Central Excise, Original Side)
Petition No.: CEXA/13/2025, IA No. GA/1/2025
Date of Judgment: 21st May, 2025
Relevant Section: Section 35G of the Central Excise Act, 1944; Sections 142(3), 142(9)(b), 174 of CGST Act, 2017; Rule 7 of Point of Taxation Rules, 2011; Rule 7B of Service Tax Rules, 1994.
Category of Dispute: Refund of tax paid under Reverse Charge Mechanism (RCM) – issue of unjust enrichment.
Facts (Para 2–4 of judgment)
The assessee, Ipsen Technologies Pvt. Ltd., had paid service tax under reverse charge after GST implementation and sought refund under Section 142(9)(b) and 142(3) of the CGST Act. The adjudicating authority rejected the refund citing misinterpretation of Circular No. 207/5/2017-ST dated 28.09.2017 and transitional provisions. Both the Commissioner (Appeals) and Tribunal initially denied relief.
The Tribunal, while relying on precedents (Circor Flow Technologies India Pvt. Ltd. and OSI Systems Pvt. Ltd.), mistakenly omitted the word “no” while reproducing the ratio that “no unjust enrichment applies to refund of tax paid under reverse charge.” As a result, though the refund was allowed in principle, the matter was remanded to adjudicating authority for unjust enrichment verification.
The assessee sought rectification pointing out factual errors and the omission of “no.” Tribunal rectified the omission but refused to modify its operative order, again remanding the matter. Hence, the assessee approached the High Court.
Questions of Law (Para 1–2 of judgment)
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Whether refund of tax paid under reverse charge can be denied on the ground of unjust enrichment?
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Whether Tribunal erred by expanding the scope of issues not raised in SCN?
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Whether Tribunal erred in remanding despite allowing refund?
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Whether Tribunal wrongly refused modification in ROM application despite admitting factual errors?
Observations (Para 4–6 of judgment)
The High Court noted that:
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The plea of unjust enrichment was never raised by the department in SCN, order-in-original, or appellate order.
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Tribunal itself accepted the existence of an error in omission of the word “no” in OSI Systems precedent.
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Once the omission was rectified, the Tribunal should have granted refund outright instead of remanding.
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The assessee’s case was factually identical to OSI Systems Pvt. Ltd., where refund of RCM service tax was allowed without unjust enrichment.
Judgment (Final Para)
The High Court set aside the Tribunal’s order and allowed the appeal. Substantial questions of law were answered in favour of the assessee. The Adjudicating Authority was directed to grant refund within 60 days of receipt of the order. The stay petition was also allowed.
Table of Cases Referred
| Case | Court | Citation | Verdict |
|---|---|---|---|
| Collector of Central Excise, Pune vs Dai Ichi Karkaria Ltd. | SC | 1999 (112) ELT 353 (SC) | Held CENVAT credit is an indefeasible right once availed. |
| Circor Flow Technologies India Pvt. Ltd. vs Principal Commissioner of GST & CE, Coimbatore | CESTAT Chennai | 2022-VIL-15-CESTAT-CHE-ST | Allowed refund of RCM service tax, unjust enrichment inapplicable. |
| OSI Systems Pvt. Ltd. vs CCT Rangareddy | CESTAT Hyderabad | 2022 (9) TMI 801 | Held no unjust enrichment applies for RCM tax refunds. |
Between Fine Lines
For industry, this judgment clarifies that service tax paid under reverse charge during the transition to GST is refundable in cash without the bar of unjust enrichment. It ensures that transitional refunds under Section 142 of CGST Act are not frustrated by erroneous remands or expanded grounds beyond SCN.
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