2021 (12) TMI 243 - AT - Service Tax

Entitlement to Interest on the amount of deposit, pending litigation, from the date of deposit till the date of actual refund - HELD THAT - The issue is not longer res integra as the Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD , following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT have held that such amount deposited during investigation and /or pending litigation is ipso facto pre-deposit and interest is payable on such amount to the assessee being successful in appeal, from the date of deposit till the date of refund. This appeal by the Revenue is dismissed. Further, it is directed that the Adjudicating Authority shall disburse the amount of interest @ 12% per annum forthwith, within a period of 45 days from the date of receipt of the copy of this order, as held by Division Bench of this Tribunal in Parle Agro (P) Ltd. - Decided against Revenue.

Summary

Issues:
Appeal against allowance of interest on deposit pending litigation.

Analysis:
1. The Revenue appealed against an order-in-appeal allowing interest at 6% on the deposit amount pending litigation until the actual refund date. The case involved a show cause notice alleging non-payment of service tax on registration fees and transfer charges. The appellant was issued recurring show cause notices for subsequent periods.

2. The order-in-original dated 27.08.2019 adjudicated the show cause notices, and the respondent was successful, leading to a refund claim of ?2,47,32,326. The Assistant Commissioner allowed the principal amount refund but rejected the interest claim, stating that interest was not payable as there was no delay in sanctioning the refund claim by the revenue. The Commissioner (Appeals) later granted interest at 6% from the deposit date till the refund date.

3. The Revenue filed an appeal arguing that interest should be paid on the refund claim if not granted within three months from the receipt of the appellate order, citing the erstwhile Section 35FF. The appellant contended that the amount deposited in 2015 was not a pre-deposit as defined in Section 35F. The appellant relied on a ruling by the Gujarat High Court and the Adjudicating Authority's findings.

4. The appellant's counsel argued that the issue was settled by a Division Bench ruling in Parle Agro (P) Ltd. vs. Commissioner, CGST, following the Supreme Court's decision in Sandvik Asia Ltd. The Division Bench held that amounts deposited during investigation or pending litigation are considered pre-deposits, entitling the successful appellant to interest from the deposit date till the refund date.

5. After considering the arguments, the appeal by the Revenue was dismissed, and the Adjudicating Authority was directed to disburse interest at 12% per annum within 45 days from the order date, following the Division Bench's decision in Parle Agro (P) Ltd. This judgment reaffirmed that interest is payable on amounts deposited during investigation or pending litigation to successful appellants.