2022 (3) TMI 1216 - AT - Service Tax

Levy of additional taxes in order to get the interest which is legally due - claim of refund was rejected on the ground of time bar and principles of unjust enrichment - Section 11BB of the Central Excise Act, 1944 - HELD THAT - Section 11BB of the Central Excise Act, 1944 which is extracted in the impugned Order-in-Appeal at page 5, makes it abundantly clear that the interest shall be paid to the assessee if refund is not granted within three months from the date of receipt of application for refund under Section 11B(1) ibid. This means that the interest under Section 11BB ibid. is automatic, which triggers when no refund is granted within three months of the date of application seeking refund. This Bench in its order in the first round of litigation in V PETER VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, THIRUVANTHAPURAM 2020 (2) TMI 46 - CESTAT BANGALORE which has also admittedly attained finality with the Revenue accepting the same. This Bench had clearly observed that there was a letter dated 25/11/2005 filed by the appellant stating that the service tax was being remitted under protest, which was sufficient to take the appellant s case within the time embargo placed under Section 11B ibid. There was also a clear finding by this Bench that the appellant had not collected the service tax and hence, question of unjust enrichment would not be applicable. It is as per the above Order-in-Appeal that the appellant became entitled to refund since it was held in the said Order-in-Appeal that the appellant was not liable to pay service tax as commission agent for buying and selling of raw cashew and the export of cashew kernel. By not specifically granting interest under Section 11BB ibid. the adjudicating authority has clearly ignored both directions of this Bench, for which the Revenue has to answer, since, both the above orders have become final. Not following the order of a higher appellante authority amounts to judicial impropriety, especially when such order of a higher appellate authority has become final. In fact, the Ld. Commissioner (A) while passing the impugned order should have specifically directed for granting interest as well as indicated by me in the above paragraph, but that having not done, therefore, to this extent the impugned order invites interference. The appellant shall be entitled to the interest under Section 11BB ibid. from the date he got relief and became entitled to in his first appeal in the first round of litigation - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Failure to grant interest under Section 11BB of the Central Excise Act, 1944 despite a favorable order.
2. Rejection of refund claim on the grounds of time-bar and unjust enrichment.
3. Non-compliance with directions of the higher appellate authority regarding the grant of interest.

Analysis:

Issue 1: Failure to grant interest under Section 11BB
The judgment highlights a case where an appellant was not paid interest due to him despite a favorable order. The Tribunal emphasized that interest under Section 11BB of the Central Excise Act is automatic and should be paid if a refund is not granted within three months of the application. The failure to grant interest in this case was considered a violation of the law, and the Tribunal set aside the impugned order and allowed the appeal for the appellant to receive the interest owed to him.

Issue 2: Rejection of refund claim
The appellant had filed a reminder application seeking a refund of a specific amount. However, the claim was rejected on the grounds of time-bar and unjust enrichment. Despite the rejection in the first appeal before the Commissioner, the Tribunal noted that the appellant's case fell within the time limit specified under Section 11B of the Act. The Tribunal also found that the appellant had not collected the service tax, making the unjust enrichment argument inapplicable. Therefore, the rejection of the refund claim was deemed unjustified.

Issue 3: Non-compliance with higher appellate authority's directions
The judgment criticized the adjudicating authority for not following the directions of the higher appellate authority regarding the grant of interest. The Tribunal emphasized that failure to comply with the orders of a higher appellate authority amounts to judicial impropriety. In this case, the Tribunal held that the appellant was entitled to interest under Section 11BB from the date he received relief in the first appeal. The impugned order was set aside, and the appeal was allowed to ensure the appellant received the interest owed to him as per the earlier orders.

In conclusion, the judgment highlights the importance of complying with legal provisions, especially regarding the payment of interest under Section 11BB of the Central Excise Act. It also underscores the significance of following the directions of higher appellate authorities to ensure justice and fairness in legal proceedings.