2021 (12) TMI 337 - AT - Service Tax

Entitlement to interest on delayed refund - Section 11BB of Customs Act - revenue deposit - principles of mutuality - HELD THAT - Once the four companies have become one, by merger, under operation of law w.e.f. 01.01.2015, as per order of the competent Court, the transactions between them during the effective date and the date of order of the competent Court, partake the character of mutuality and hence are no longer taxable by operation of law. Whatever tax is deposited by different companies during the intervening period, ipso facto becomes Revenue deposit‟. On such Revenue deposit, interest has to be paid in terms of Section 11BB of the Act, from end of three months from the date of refund claim. There is no error in the impugned order-in-appeal - Appeal dismissed - decided against Revenue.

Summary

Issues:
Refund claim eligibility and interest calculation post-merger of companies.

Detailed Analysis:
The case involved a refund claim filed by an appellant after the merger of three companies into one, seeking a refund on service transactions between the merged companies. The Assistant Commissioner determined the eligibility date for refund interest as 01.11.2018, based on the date the NCLT merger order was produced. The Commissioner (Appeals) allowed the appeal, citing Section 11BB of the Act and the Ranbaxy Lab. judgment, granting interest from the end of three months from the refund application date. The appellant was entitled to interest on the delayed refund claim as per statutory provisions.

The Revenue appealed, arguing that different companies could not be treated as one entity until the NCLT order was produced. They contended that the refund application made before the NCLT order was not valid until that date. However, the Tribunal held that post-merger, the transactions between the companies were non-taxable due to mutuality, making the tax deposits revenue deposits. Interest had to be paid as per Section 11BB from three months after the refund claim date. The Tribunal upheld the Commissioner's decision, dismissing the Revenue's appeal.

The Tribunal's decision was based on the legal implications of the merger, treating the companies as a single entity post-merger, affecting the taxability of transactions and the calculation of interest on revenue deposits. The judgment emphasized adherence to statutory provisions and legal precedents in determining refund eligibility and interest calculation post-merger. The Tribunal's ruling aligned with the principles of mutuality and statutory provisions under Section 11BB of the Act, ensuring the appellant's entitlement to interest on the delayed refund claim.