2023 (2) TMI 69 - AT - Service Tax

Interest on refund already sanctioned - Calculation of relevant time - entitlement for the interest after expiry of three months from the date of filing refund claim which in the present case is 13.06.2011 - HELD THAT - The learned Commissioner (Appeals) has gravely erred in misinterpreting the overall provision and clarification of board circular. The provision of Section 11BB is very clear according to which the claimant shall be entitled for the interest after expiry of three months from the date of refund application - In the present case the refund application was admittedly filed on 13.06.2011 and it is this case which was under litigation up to the tribunal and subsequently the appellant succeeded in this refund case only. In this case the refund application was filed on 13.06.2011 shall be treated as refund application as mentioned under Section 11BB. The appellant stand entitled for the refund right from the date of application i.e. 13.06.2011 accordingly the appellant is legally entitled for the interest after the expiry of three months from the date of refund application i.e. 13.06.2011 - The judgment of Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT is directly applicable in the facts of the present case where it was held that liability of the revenue to pay interest under Section 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. There are no ambiguity on the position that if the refund is not sanctioned within three months from the date of filing the appellant is entitled for the interest on the refund sanctioned - also in the present case also the appellant is legally entitled for the interest on refund. Appeal allowed.

Summary

Issues:
Entitlement to interest on refund already sanctioned.

Analysis:
The issue in this case revolves around the entitlement of the appellant to interest on a refund that was already sanctioned. The appellant's counsel argued that the interest should be payable after three months from the date of filing the refund application, which in this case was 13.06.2011. The appellant relied on various judgments to support this argument. On the other hand, the Assistant Commissioner representing the revenue reiterated the findings of the impugned order.

Upon careful consideration of the submissions and perusal of records, the Tribunal found that the appellant had indeed filed the refund application on 13.06.2011, which was initially rejected but later allowed by the Tribunal through an order dated 07.10.2021. However, the interest on the refund was not granted. The Commissioner (Appeals) had rejected the claim of interest, stating that the refund was sanctioned within three months from a subsequent date mentioned in a letter. The Tribunal disagreed with this interpretation, emphasizing that Section 11BB of the Central Excise Act, 1944 clearly states that interest is payable after three months from the date of the refund application.

The Tribunal referenced the judgment of the Hon'ble Supreme Court in M/s. Ranbaxy Laboratory Ltd., which clarified that interest becomes payable if the refund is not sanctioned within three months from the date of filing the application. Therefore, the Tribunal concluded that the appellant was legally entitled to interest on the refund. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis highlights the legal interpretation of the entitlement to interest on a sanctioned refund, emphasizing the importance of the timeline specified in the relevant legal provisions and judicial precedents.