2017 (1) TMI 381 - HC - Service Tax

Interest on delayed refund - Whether the CESTAT fell into error in directing payment of interest upon the delayed refund as required under Section 11B of the Central Excise Act? - Held that - the Tribunal which we notice had directed refund in a nuance manner for different periods - the law declared in Ranbaxy Laboratories Limited vs. Union of India, 2011 (10) TMI 16 - Supreme Court of India which was followed by the CESTAT as appropriate and was properly applied - interest on delayed refund rightly demanded - appeal dismissed - decided against appellant-Revenue..

Summary

Issues:
- Question of law regarding payment of interest on delayed refund under Section 11B of the Central Excise Act.
- Interpretation of the time limit for filing refund applications and completeness of documents.
- Application of legal precedent in determining entitlement to interest on delayed refund.

Analysis:
1. Question of Interest on Delayed Refund:
The main issue in this case revolved around the entitlement of the assessee to claim interest on delayed refund as per Section 11B of the Central Excise Act. The CESTAT allowed the appeal and held that the appellant was entitled to interest on the delayed refund amount. The Tribunal considered the factual matrix of the case, including the dates of refund claims and payments made by the appellant, and concluded that interest was due on specific amounts for different periods. The decision was based on the principle established in the case of Ranbaxy Laboratories Ltd., emphasizing the entitlement to interest on delayed refunds.

2. Time Limit for Filing Refund Applications:
The revenue contended that the interest claimed by the assessee for the entire period was not justified, citing Section 11B which mandates that refund applications must be lodged within one year and be complete as per prescribed rules. However, the court noted that the basic application was filed within the stipulated one-year period. Despite the revenue's argument that complete particulars were furnished only in 2013, the court observed that the documents submitted earlier were not considered by the competent officer, leading to the rejection of the application as not maintainable. The court upheld the Tribunal's decision to grant interest on delayed refunds based on the factual and legal analysis.

3. Application of Legal Precedent:
In analyzing the case, the court referred to the legal precedent set in the case of Ranbaxy Laboratories Limited vs. Union of India, which was followed by the CESTAT. The court found that the Tribunal's decision aligning with the principles established in the aforementioned case was appropriate and correctly applied. Consequently, the court dismissed the appeal, emphasizing that there was no question of law raised that warranted a different outcome.

In conclusion, the High Court upheld the CESTAT's decision to grant interest on delayed refunds, emphasizing compliance with statutory provisions, the completeness of refund applications, and the application of relevant legal precedents in determining the entitlement to interest.