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2023 (1) TMI 738 - AT - Service TaxInterest on account of delayed refund - Denial on the ground that there was no delay in sanctioning of refund amount as per Section 11BB of the Central Excise Act, 1944 - HELD THAT - It is an amount paid by the appellant as service tax during the course of investigation. This fact is not in dispute. When any amount paid during the investigation, it is only a predeposit made by the appellant. On succeeding in the appeal, the predeposit made in connection to the said appeal is liable to be refunded with interest. The order of Tribunal has attained finality. In that circumstance, the appellant is entitled to claim interest from the date of deposit till its realization. The issue is no longer res integra as the Division Bench of this Tribunal in M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) 2021 (5) TMI 870 - CESTAT ALLAHABAD , following the ruling of the Apex Court in SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT have held that such amount deposited during investigation and/or pending litigation is ipso facto pre-deposit and interest is payable on such amount to the assessee being successful in appeal, from the date of deposit till the date of refund. The impugned order is not sustainable in the eyes of law - appeal allowed.
Issues:
Refund claim of service tax with interest, applicability of interest on delayed refund, interpretation of Section 11BB of the Central Excise Act, 1944. Analysis: The appeal was filed against the Order-in-Appeal passed by the Commissioner (Appeals), Ahmedabad, regarding a refund claim of service tax. The appellant filed a refund claim of Rs. 91,23,906/- on account of an appeal allowed in their favor by CESTAT. The appellant provided services under "Erection, Commissioning, or Installation Service." A show cause notice was issued for non-payment of service tax, and after investigation, the appellant paid Rs. 51,16,092/-. The Tribunal held that the appellant was not liable to pay service tax. The appellant claimed a refund, which was granted, but interest on delayed refund was denied based on Section 11BB of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the decision, stating that interest liability arises only after 3 months from the date of the refund application. The appellant contended that interest should be paid from the date of payment of duty to the date of refund, citing relevant legal precedents. The Authorized Representative for the department supported the impugned orders. After hearing both sides, the Member (Judicial) found that the amount paid by the appellant as service tax during the investigation was a pre-deposit. As the Tribunal's order had attained finality, the appellant was entitled to claim interest from the date of deposit till realization. Referring to a Division Bench ruling, it was established that interest is payable on such pre-deposit amounts to the successful appellant. Therefore, the Member (Judicial) held that the impugned order was not sustainable in the eyes of the law. Accordingly, the impugned order was set aside, and the appeal was allowed. The judgment was pronounced in the open court on 22.12.2022.
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