2018 (6) TMI 527 - AT - Service Tax

Rectification of Mistake - it was wrongly held by the Tribunal that interest will be applicable only when the right to refund arose - wrong interpretation - scope of rectification of mistake - Held that - Whether the interpretation was wrongly made is no ground for entertaining an application for rectification of mistake. If such an application is entertained, then in every case, wherever the interpretation may be not suitable to the assessee, to unsettle the legal position application will be filed before every bench. That scope is not available under the provisions of rectification of mistake - there is no apparent error in the order. The only remedy lies is with the Hon ble High Court and the applicant has liberty to approach the High Court with an appeal filed under Section 35G of the Central Excise Act, ROM Application dismissed.

Summary

Issues:
Interpretation of Supreme Court judgment on interest applicability for refunds under Section 11B and Section 11BB.

Analysis:
The applicant filed a ROM application challenging the Tribunal's interpretation of the Hon'ble Supreme Court judgment in the case of Ranbaxy Laboratories Ltd regarding the applicability of interest on refunds. The applicant argued that interest arises immediately after three months from the date of the refund application, contrary to the Tribunal's interpretation. The applicant contended that the explanation under Section 11B is relevant only when the refund arises from setting aside a demand order, not in cases where the refund application is timely filed, as in the present matter.

The applicant emphasized that once the Tribunal allows the refund, it becomes payable within three months from the initial application date. The applicant further pointed out that the explanation to Section 11BB does not apply in the current scenario, alleging a misinterpretation by the Tribunal. Additionally, the applicant relied on the judgment in Assistant Commissioner, Income Tax v. Saurashtra Kutch Stock to support their argument.

On the other hand, the Revenue, represented by the Learned AR, supported the Tribunal's order, stating that the Tribunal correctly considered the Ranbaxy Laboratories Ltd judgment and concluded that interest is not admissible on the refund. The Revenue argued that there was no apparent error in the order and requested the dismissal of the ROM application.

After considering both parties' submissions, the Member (Judicial) noted that the Tribunal had indeed examined the Ranbaxy Laboratories Ltd judgment in detail and provided a thorough interpretation in the order. The Member opined that whether the interpretation was correct or not does not warrant rectification of mistake. It was highlighted that allowing such applications based on unfavorable interpretations would lead to unsettling legal positions in various cases, which is not the purpose of rectification of mistake provisions. The Member concluded that the High Court is the appropriate forum for challenging such interpretations under Section 35G of the Central Excise Act. Consequently, the ROM application was dismissed, granting the applicant the liberty to approach the High Court with an appeal.

In conclusion, the judgment delves into the nuanced interpretation of legal provisions governing the applicability of interest on refunds, emphasizing the need for clarity and consistency in judicial decisions while providing guidance on the appropriate avenues for challenging unfavorable interpretations.