2024 (9) TMI 697 - AT - Service Tax

Interest on amount refunded - amount refunded was pre-deposit or not - relevant date for calculation of interest - HELD THAT - The issue involved in the present case is no longer res-integra and is squarely covered by the decisions of Hon ble Supreme Court in Ranbaxy laboratories Ltd. 2011 (10) TMI 16 - SUPREME COURT where it was held that ' ever since Section 11BB was inserted in the Act with effect from 26th May 1995, the department has maintained a consistent stand about its interpretation. Explaining the intent, import and the manner in which it is to be implemented, the Circulars clearly state that the relevant date in this regard is the expiry of three months from the date of receipt of the application under Section 11B(1) of the Act.' Undisputedly appellant is entitled to interest on the amounts refunded to him after the dispute was finally determined in their favour by the order of this tribunal. However the interest as per these orders would necessary be governed by the provisions of section 11BB and should be paid after expiry of three months from the date of receipt of the application for refund and not from the date of deposit as has been held by the original authority in the orders dated 09.07.2019 and 18.07.2019. Even if it is held that appellant was entitled to refund of interest as per section 35 FF then also the interest could not have been paid from the date of deposit, in view of the Proviso to section 35FF, which provided that in respect of the amounts deposited prior commencement of Finance (No. 2) Act, 2014 the provisions as contained in erstwhile section 35FF shall apply. Appellant is entitled to interest if any if the refund of the amount deposited was made beyond the period of three months from the date of refund application communicating the order in their favour to the jurisdictional Deputy/ Assistant Commissioner. In the present case the refund applications for refund of amount deposited under protest were allowed and the amounts paid vide order dated 11.06.2019 within a month of the receipt of the application. Thus appellant would not be entitled to any interest as per the section 11BB or Section 35 FF of Central Excise Act, 1944. Appeal dismissed.

Issues Involved:
1. Entitlement to interest on the refunded amount deposited under protest.
2. Applicability of Section 35FF of the Central Excise Act, 1944.
3. Interpretation of the provisions of Section 11B and 11BB of the Central Excise Act, 1944.
4. The relevance of precedents cited by the appellant.

Detailed Analysis:

1. Entitlement to Interest on Refunded Amount Deposited Under Protest:
The appellant argued that the amount paid as service tax under protest during litigation was not a pre-deposit or service tax but merely a deposit. It was retained by the Revenue Authority without any legal authority, violating Article 265 of the Constitution of India. The appellant claimed interest at 12% p.a. from the date of payment under protest until realization, citing several judicial precedents. The Revenue, however, maintained that the refunded amount was not a pre-deposit under Section 35F, hence no interest under Section 35FF was warranted.

2. Applicability of Section 35FF of the Central Excise Act, 1944:
The tribunal noted that the amount deposited by the appellant was refunded within a month of the application. As per Section 35FF, interest on delayed refunds is applicable only if the refund is not made within three months from the date of the appellate authority's order. Since the refund was processed promptly, the tribunal concluded that the appellant was not entitled to any interest under Section 35FF.

3. Interpretation of the Provisions of Section 11B and 11BB of the Central Excise Act, 1944:
The tribunal emphasized that interest on delayed refunds under Section 11BB commences from the expiry of three months from the date of receipt of the refund application. The tribunal cited the Supreme Court's decision in Ranbaxy Laboratories Ltd., which clarified that the liability to pay interest starts from the date of receipt of the refund application, not from the date of deposit. The tribunal also referenced Willowood Chemicals Pvt. Ltd., which reinforced that statutory interest is governed by the provisions of the statute and should not exceed the prescribed rate.

4. The Relevance of Precedents Cited by the Appellant:
The tribunal reviewed the precedents cited by the appellant, including decisions in M/s Jalan Con Cast Ltd., Ebiz.com Pvt. Ltd., and others. It noted that while these cases supported the appellant's claim for refund with interest, they did not directly address the issue at hand. Specifically, the tribunal found that the refund applications in the present case were processed within the stipulated time, making the appellant ineligible for interest under Sections 11BB or 35FF.

Conclusion:
The tribunal dismissed the appeal, concluding that the appellant was not entitled to any interest on the refunded amount as the refund was made within the prescribed period. The tribunal upheld the interpretation of Sections 11BB and 35FF, emphasizing the statutory timelines for processing refunds and the conditions under which interest is applicable. The tribunal's decision was based on a thorough analysis of the relevant legal provisions and judicial precedents, ensuring that the refund process adhered to the statutory framework.

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