2017 (6) TMI 718 - AT - Service Tax

Refund claims - appellant availed CENVAT credit of various input services which were used for provision of output services and the CENVAT credit was accumulated - interest on rejected refunds - Held that - appellant has rendered output services in form of ITSS and BAS which are exported. - the impugned orders which reject the refund claim filed by the appellant of the service tax paid on the above input services is unsustainable - refund allowed. Non-payment of interest on the delayed refunds - Held that - similar issue was decided in the case of Ranbaxy Laboratories Ltd. Vs. UOI 2011 (10) TMI 16 - Supreme Court of India , where it was held that liability of the revenue to pay interest u/s 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made - the appellant is eligible for the interest in accordance with law in respect of the delayed refunds sanctioned to them. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against rejection of refund claims and denial of interest on rejected claims.

Analysis:
The appeals raised a common question of law regarding the rejection of refund claims and denial of interest by the lower authorities. The appellant, registered for software-related services, sought refunds for CENVAT credit on input services used for output services exported outside India. Initially, all refund claims were rejected, but upon appeal, some were partially allowed. The first appellate authority remanded the matter for reconsideration, which led to partial rejection and denial of interest. The Tribunal noted that similar issues were decided in favor of the appellant in various cases, allowing CENVAT credit for similar input services. The Tribunal cited precedents where service tax paid on different services was considered eligible for credit. The impugned orders were set aside, and the appeals were allowed.

The appellant also contested the denial of interest on delayed refunds. The court found merit in the contention that the adjudicating authority initially rejected the claims without reason, later partially allowing them upon remand. Citing the case of Ranbaxy Laboratories Ltd. Vs. UOI, the court emphasized that interest under Section 11BB of the Act becomes payable after three months from the application for refund, not from the date of the refund order. Following this interpretation, the court held that the appellant was entitled to interest on delayed refunds. All appeals were allowed accordingly.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeals against the rejection of refund claims and ordering the payment of interest on delayed refunds. The judgment highlighted the eligibility of the appellant for CENVAT credit on input services and the legal obligation to pay interest on delayed refunds as per established law.