2018 (12) TMI 379 - AT - Service Tax

Interest on delayed refund - interest denied on the ground that the appellant has not filed refund claims in form ARE-1 at the time of filing of refund - Held that - While issuing show cause notice to deny the refund claims of the appellant, no issue was raised that the refund claims have not been filed in form i.e. ARE-1. Therefore, the revenue cannot deny interest on delayed refund on the said ground - the appellant is entitled to interest on delayed refund after 3 months from the date of filing of refund claims till its realization - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of interest on delayed refund.

Analysis:
The appellant filed refund claims for service tax paid on specified services used for export of goods. Show cause notices were issued for rejection of refund claims due to non-supply of documents, which the appellant claimed to have already submitted. The refund claims were initially rejected, and subsequent appeals were also unsuccessful. The Tribunal remanded the matter back to the adjudicating authority for re-consideration. The authority sanctioned a part of the refund but rejected the claim for interest on delay. The appellant contended that they filed the refund claims in time and that the issue of unjust enrichment did not apply. The appellant argued that the denial of refund claims was based on a technicality of not filing in the proper form, ARE-1, which was not raised in the show cause notice. The appellant sought interest on delayed refund as per the decision in Ranbaxy Laboratories Ltd. vs. Union of India.

The Revenue argued that the appellant filed the refund claims in form ARE-1 only after obtaining a remand order from the Tribunal, and the claims were immediately sanctioned. Therefore, the Revenue contended that the appellant was not entitled to claim interest on delayed refund.

After hearing both parties, the Tribunal found that the show cause notices did not raise the issue of the refund claims not being filed in form ARE-1. Therefore, the Tribunal held that the appellant was entitled to interest on delayed refund as per the decision in Ranbaxy Laboratories Ltd. The impugned orders denying interest on delayed refund were set aside, and the appeals filed by the appellant were allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were entitled to interest on delayed refund after three months from the date of filing the refund claims, as the issue of the proper form for filing the claims was not raised in the show cause notices.