2015 (11) TMI 348 - AT - Service Tax

Claim of interest - Delayed refund - Unjust enrichment - Held that - As per the table, the appellant has returned the amount of ₹ 6,11,41,066/- before filing the refund claim and a sum of ₹ 4,37,66,670/- were returned on 28.09.2010 and a sum of ₹ 4,24,78,264/- were returned on 26.05.2011. These facts are admitted by both the sides. It is admitted fact that refund claim was sanctioned to the appellant only on 28.10.2013. Therefore, relying on the decision of Ranbaxy Laboratories Ltd. (2011 (10) TMI 16 - Supreme Court of India) the appellant is entitled for claim of interest on delayed refund of ₹ 6,11,41,066/- after three months from 31.07.2009 till 28.10.2013. For the amount of ₹ 4,37,66,670/- the appellant is entitled for interest for the period 28.09.2010 to 28.10.2013. On the amount ₹ 4,24,78,264/- the appellant is entitled to claim of interest for the period 26.05.2011 to 28.10.2013. - appellant is entitled to claim interest - Decided in favour of assessee.

Summary

Issues:
- Claim of interest on delayed refund
- Barred by limitation
- Unjust enrichment

Analysis:
1. Claim of interest on delayed refund: The appellant filed a refund claim for service tax paid on advances received from a bank. The claim was initially rejected on grounds of limitation, unjust enrichment, and non-refund of the entire advance amount. The appellant approached the Ld. Commissioner (A) who allowed the refund claim. However, interest on delayed refund was denied by the Ld. Commissioner (A) as the refund was sanctioned within three months of document submission. The appellant argued that interest should be granted based on the date of the refund claim, citing a Supreme Court case. The Tribunal held that interest on the delayed refund was justified, considering the timeline of the refund claim and the subsequent refund sanction.

2. Barred by limitation: The appellant's refund claim was initially rejected on the basis of being barred by limitation. The Ld. Commissioner (A) later determined that the refund claim was filed within the permissible time frame. The Tribunal acknowledged this decision and emphasized that the date of the refund claim was crucial in determining the entitlement to interest on delayed refund. The appellant's compliance with the timeline for filing the claim was a key factor in the final decision to grant interest on the delayed refund amount.

3. Unjust enrichment: The issue of unjust enrichment was raised during the proceedings, as the appellant had not refunded the entire advance amount received from the bank at the time of filing the refund claim. The Tribunal noted that the appellant had returned a significant portion of the advance before filing the claim, with the remaining amount refunded later. The Tribunal considered the dates of these refunds and determined the periods for which interest on the delayed refund would be applicable, in line with the principles established in the Ranbaxy Laboratories Ltd. case cited by the appellant's representative.

In conclusion, the Tribunal ruled in favor of the appellant, granting interest on the delayed refund amount based on the timeline of the refund claim and the subsequent refund sanction. The decision highlighted the importance of timely filing of refund claims and compliance with refund procedures to avoid delays and ensure entitlement to interest on delayed refunds.