2018 (5) TMI 1677 - AT - Service Tax

Interest on delayed refund - Refund of pre-deposit alongwith Interest - amount deposited under the proviso to Section 35F - Section 35FF of CEA - Held that - It is a mandate that the amount of pre-deposit be refunded, consequent upon the order of the appellate authority, the interest as such for the time being fixed by the Central Government shall be paid on the ground of refund from the date of payment of amount till the date of refund of such amount - assessee shall be entitled to refund of the amount deposited alongwith interest at prescribed rate from the date of making such deposit to the date of refund in terms of Section 35FF of the CEA 1944 or Section 129EE of the CA 1962. Thus, there is no reason as to why the interest in the present case be withheld. The appellant is entitled to the interest on the refund of its pre-deposit under Section 35FF of the CEA - Appeal allowed.

Summary

Issues Involved:
Refund of pre-deposit along with interest under Section 35FF of the Central Excise Act.

Detailed Analysis:

Issue 1: Refund of Pre-Deposit and Interest Claim

The appellant filed an appeal seeking refund of a pre-deposit of Service Tax. The Tribunal's order directed the refund, but the implementation was delayed. The appellant then applied for the refund, which was partly allowed without interest. The appellant argued, citing legal precedents, that interest should be paid on the refund of the pre-deposit upon succeeding in the appeal.

Issue 2: Arguments and Rebuttals

The appellant relied on cases emphasizing that the refund of pre-deposit should include interest once the appeal is allowed. The Department argued that a written application for refund within 3 months of filing is mandatory. The Department contended that the refund was made within the permissible period and that the appellant's cited cases were not applicable to the current scenario.

Issue 3: Interpretation of Section 35FF

The Tribunal analyzed Section 35FF of the Central Excise Act, which mandates interest on delayed refunds of amounts deposited under certain orders. The provision uses the term "shall," making it mandatory to pay interest on the refund. The Tribunal noted that while a written application is important, the relevant provision allows for discretion by the assessee.

Issue 4: Decision and Ruling

After considering the arguments and legal provisions, the Tribunal allowed the appeal, stating that the appellant was entitled to interest on the refund of the pre-deposit under Section 35FF of the Central Excise Act. The Tribunal highlighted the importance of following statutory provisions and legal precedents in determining the entitlement to interest on refunds.

In conclusion, the judgment emphasized the mandatory nature of paying interest on delayed refunds under Section 35FF of the Central Excise Act, ensuring that appellants are entitled to interest on pre-deposit refunds upon succeeding in their appeals.