2025 (2) TMI 680 - AT - Service Tax

Relevant date for calculation of interest on refund claim - Interest on the refund amount has not been granted from the date of the application for refund - seeking grant of interest for the remaining period from 11.11.2016 to 13.06.2022 - HELD THAT - Reference made to the earlier two orders of the Commissionerate Jaipur and Gautam Budh Nagar has interpreted the order of the Tribunal transferring the refund claims to the concerned jurisdictional Commissionerate to mean that the date of filing of the original refund application shall be the date of transfer of refund and therefore the interest has to be calculated from the said date. The application for refund has now been considered on being transferred to the Jurisdictional Commissionerate. Accordingly the appellant has been granted interest on the refund amount from the date of the original filing of the refund claim after a period of three months. In view of the above two orders which seems to have been accepted by the Revenue it is felt that they have rightly interpreted the order of the Tribunal as referred above. The Revenue cannot pick and choose to grant relief in one case and deny the same in the other case. Once the original date of filing of the application has to be considered the necessary implication is that the grant of interest shall also relate back to the said date after the expiry of three months. Reference made to the decision of the Supreme Court in the case of Ranbaxy Laboratories Ltd. Vs. Union of India 2011 (10) TMI 16 - SUPREME COURT wherein it has been held that interest under Section 11BB of the Act becomes payable if on an expiry of a period of three months from the date of receipt of the application for refund the amount claimed is still not refunded. Conclusion - The appellant is entitled to interest after the expiry of three months from the date of original filing of the refund application i.e. 11.11.2016 till the date of payment of refund amount i.e. on 13.06.2022. Appeal allowed.

Summary

The present appeal before the Appellate Tribunal concerns the grant of interest on a refund amount from the date of the application for refund. The key issue is determining the starting date for calculating interest on the refund amount. The appellant filed a refund application on 11.11.2016, which was rejected initially but later allowed by the Dy. Commissionerate, Division-Okhla, GST Commissionerate, Delhi-South. The dispute revolves around the period of delay in granting interest on the refund amount, which was approximately 2324 days from the date of the application to the date of payment of the refund.The appellant relied on Section 11BB of the Central Excise Act, 1944, which mandates the payment of interest at 6% per annum if a duty ordered to be refunded is not repaid within three months of the application date. The appellant cited two orders from other Commissionerates where interest was granted from the date of the original filing of the refund claim. On the other hand, the Department's Authorized Representative argued that interest should be calculated from the date the application was received by the concerned commissionerate, i.e., 14.06.2022.The Tribunal analyzed the issue by referencing previous orders and legal provisions. It noted that the two Commissionerates interpreted the Tribunal's order to mean that interest should be calculated from the date of the original filing of the refund claim. The Tribunal agreed with this interpretation, emphasizing that the grant of interest should relate back to the original filing date after the expiry of three months. The Tribunal also cited the Supreme Court's decision in Ranbaxy Laboratories Ltd. Vs. Union of India, which clarified the payment of interest on delayed refunds under Section 11BB of the Central Excise Act, 1944.Ultimately, the Tribunal found no merit in the impugned order and set it aside. It ruled that the appellant is entitled to interest from the expiry of three months from the date of the original filing of the refund application on 11.11.2016 until the date of payment of the refund amount on 13.06.2022. Consequently, the appeal was allowed, and the appellant was granted the interest as per the above calculation.In conclusion, the Tribunal's decision clarified the starting point for calculating interest on the refund amount, emphasizing the importance of adhering to the statutory provisions and previous interpretations in similar cases. The ruling established that interest should accrue from the date of the original filing of the refund claim after the three-month period, as mandated by Section 11BB of the Central Excise Act, 1944.