2016 (8) TMI 896 - AT - Service Tax

Interest on delayed refund business auxiliary services Held that - the issue has been decided in a Supreme Court judgement in Union of India and ors. vs. M/s Hamdard (Waqf) Laboratories 2016 (3) TMI 68 - SUPREME COURT. The interest for delayed payment of refund will be payable from the date of expiry of the period of three months from the date of receipt of the refund claim till the date of payment of refund appeal allowed decided in favor of appellant.

Summary

Issues:
Refund of service tax under Business Auxiliary Service - Interest on delayed refund.

Analysis:
The appellant, registered for providing services, filed refund claims for service tax paid under Business Auxiliary Service. The Adjudicating Authority rejected the refund applications through separate orders dated 3rd June, 2011. Appeals to the Commissioner (Appeals) were unsuccessful, leading to the matter being taken to CESTAT. CESTAT remanded the issue back for reconsideration, resulting in the Original Authority sanctioning the refund claims without interest on delayed refund. The appellant then approached the Commissioner (Appeals) for interest on the delayed refund, which was granted for a period of three months from the date of the Tribunal's order till the payment of refund. The appellant challenged these orders before the Tribunal, arguing that interest should be payable from three months after the filing of the refund claim until the payment of the refund.

During the hearing, it was pointed out that the issue had been settled by the Hon'ble Supreme Court in previous cases. Referring to the decision in Union of India vs. M/s Hamdard (Waqf) Laboratories, it was established that interest for delayed payment of refund becomes payable from the date of expiry of three months from the receipt of the refund claim until the payment of the refund. The relevant paragraph 17 of the Hamdard Laboratories case was reproduced to emphasize this point. The explanation provided in the case clarified that interest under Section 11BB of the Act becomes payable after three months from the date of receipt of the application for refund if the amount claimed is still not refunded. Thus, the date from which interest becomes payable is not postponed by the explanation.

Given that the issue was no longer open to debate, the impugned orders were set aside, and the appeals were allowed with consequential relief. The judgment was dictated and pronounced in open court by the Member (Technical) of the Appellate Tribunal CESTAT NEW DELHI.