2019 (6) TMI 384 - HC - Service Tax

Interest on refunds of service tax - Section 11 BB of the Central Excise Act - HELD THAT - The appellant's claim is entirely justified having regard to the statutory regime of Section 11 BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. Section 83 of the Finance Act expressly makes various provisions of the Central Excise Act applicable in relation to service tax. Section 11 BB has been interpreted by the Supreme Court inter alia in UNION OF INDIA OTHERS VERSUS M/S HAMDARD (WAQF) LABORATORIES 2016 (3) TMI 68 - SUPREME COURT . The Supreme Court has held that the liability of the Revenue to pay interest under the said provision commences from the expiry of three months from the date of receipt of the application for refund. The question of law is answered in the affirmative, i.e. in favour of the assessee and against the Revenue - appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim for interest on refunds of service tax not addressed by the Tribunal.

Analysis:
The appellant filed refund claims for service tax paid on taxable input services for various quarters. The Assistant Commissioner sanctioned a partial refund, and the appellant appealed for the remaining amount, which was partly allowed by the Tribunal. However, the appellant's grievance was that the Tribunal did not address their claim for interest on the refunds allowed, as per Section 11 BB of the Central Excise Act, 1944 and Section 83 of the Finance Act, 1994.

The Court framed the question of law as to whether the appellant was entitled to interest under Section 11 BB of the Central Excise Act. The Court found the appellant's claim justified based on the statutory provisions of Section 11 BB and Section 83 of the Finance Act, which makes the provisions of the Central Excise Act applicable to service tax matters. Section 11 BB mandates the payment of interest on delayed refunds, starting from three months after the application for refund is received.

Referring to interpretations by the Supreme Court in previous cases, the Court clarified that the liability of the Revenue to pay interest under Section 11 BB commences after three months from the receipt of the refund application. Consequently, the Court answered the question of law in favor of the appellant and directed the Assessing Authority/GST Officer to calculate and remit the interest amount to the appellant's account within three months.

In conclusion, the appeal was allowed, and the appellant was granted the entitlement to interest under Section 11 BB of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. The Court's decision emphasized the importance of timely payment of interest on delayed refunds as per the statutory provisions to ensure fairness in tax matters.