2013 (2) TMI 462 - AT - Service Tax

Interest on delayed payment of refunds - whether the provisions of Section 11B of the Central Excise Act, 1944 are applicable for the purpose of service tax - Held that - There being no dispute regarding belated sanction of refund to the appellant, the appellant is eligible for the interest on such belatedly sanctioned refunds. The amount of interest needs to be calculated by the lower authorities, period after three months of filing of the refund claim by the appellant with the authorities, till the amount is refunded to them. See NIRMA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD 2011 (3) TMI 1257 - CESTAT, AHMEDABAD Notification No. 41/07. dated 6-10-2007 itself provides clearly that the relevant date for determination of limitation is the date on which proper officer of Customs makes an order permitting clearance and loading of the goods for exportation. Therefore the finding that the claim is time-barred because it is filed beyond the period when counted from the date of ARE-1 is appears to be against the provisions of Notification No. 41/07-S.T., dated 6-10-2007. Provisions of Section 83 of Finance Act, 1994 clearly provide that provisions of Section 11BB are made applicable to service tax matters, there is no reason as to why this aspect has not been verified before rejecting the refund claim by both the lower authorities - the impugned orders are required to be set aside and the matter is remanded to the original adjudicating authority to verify the facts, correctly record them and also apply the statute correctly to the facts of the case - in favour of assessee as directed.

Summary

Issues:
1. Eligibility for interest on delayed payment of refunds under Notification No. 17/2009-ST.
2. Applicability of Section 11B and Section 11BB of the Central Excise Act in service tax matters.
3. Interpretation of provisions of Section 83 and Section 93 of the Finance Act, 1994 regarding interest on delayed refunds.
4. Correct application of statutory provisions and verification of facts by lower authorities.

Issue 1: The appellant, a merchant exporter, filed a refund claim under Notification No. 17/2009-ST for service tax credit. The adjudicating authority sanctioned the refund but denied interest on delayed payment, citing Section 11B of the Central Excise Act as not applicable for service tax refunds. The appellant argued for interest post three months of filing, citing a Tribunal decision and the Supreme Court judgment on delayed refunds.

Issue 2: The Additional Commissioner contended that Section 11B and Section 11BB of the Central Excise Act do not apply to service tax refunds under Notification No. 41/2007-ST. The Tribunal found no dispute on the appellant's eligibility for refund and upheld the first appellate authority's decision, emphasizing the issue of interest on belatedly sanctioned refunds.

Issue 3: The appellant's consultant highlighted Section 83 and Section 93 provisions, arguing for interest payment based on the Supreme Court ruling and the application of Section 11BB to service tax matters. The Tribunal criticized the lower authorities for misinterpreting the law and not verifying facts correctly, remanding the matter for expedited reevaluation.

Issue 4: The Tribunal observed discrepancies in the lower authorities' findings, directing a reexamination of facts and correct application of statutory provisions by the original adjudicating authority. The Tribunal emphasized the need for a timely resolution, setting aside the impugned orders and allowing the appeals with consequential relief, pending a High Court appeal by the Revenue.

In conclusion, the Tribunal held that the appellant is entitled to interest on belatedly sanctioned refunds, directing the calculation of interest from three months post filing until the refund payment. The judgment emphasized the proper application of statutory provisions and the expeditious resolution of the matter by the authorities.