2023 (4) TMI 1015 - AT - Service Tax

Interest on refund amount - relevant date - from which date the appellant is entitled to claim interest on delay payment of refund? - section 11BB of Central Excise Act, 1944 - HELD THAT - Union Budget, 2016 exempted services provided to Government under notification no.09/2016 dated 1.3.2016 under exemption entry S.No.12A. It is also found that the appellant filed application for the refund of service tax paid amounting to Rs.80,20,869/- on the said services on 14.9.2016 and later on restricted his claim of refund to Rs.31,71,754/-, which was further reduced by the Assistant Commissioner to Rs.30,20,628/- and the same was finally received by the appellant on 17.12.2020 but without any interest. This issue is no more res-intera as the same has been settled by Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT wherein Supreme Court after considering relevant provisions of section 11B and 11BB of Central Excise Act, 1944 held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. The assessee is entitled to claim interest after 3 months from the date of application for refund claim till its realization. The appeal is allowed.

Summary

Issues:
The judgment involves the eligibility for interest on a refund amount, specifically focusing on the period for which interest should be granted.

Summary:
The appellant, engaged in providing various services, filed a refund application for service tax paid during the financial year 2015-16, amounting to Rs.80,20,869. The application was filed on 14.9.2016, seeking a refund of Rs.31,71,754 after withdrawing a portion of the claim. The Assistant Commissioner initially rejected the refund claim but was later accepted by the Commissioner (Appeals) who sanctioned a refund of Rs.30,20,628 on 9.10.2020 without granting any interest on the delayed payment. The appellant appealed for interest as per section 11BB of the Central Excise Act, 1944, and eventually received the refund on 17.12.2020 without any interest.

Upon hearing both parties, the Tribunal noted that the only issue was the date from which the appellant is entitled to claim interest on the delayed payment of the refund. Citing the Supreme Court's decision in the case of M/s. Ranbaxy Laboratories Ltd., the Tribunal clarified that interest becomes payable after three months from the date of the refund application. It was emphasized that interest under Section 11BB of the Act is triggered automatically for any refund sanctioned beyond three months. The Tribunal also referred to a Circular by the Central Board of Excise & Customs, stressing the importance of timely refund processing and interest payment in such cases.

Based on the legal interpretations and precedents, the Tribunal allowed the appeal, granting the appellant the entitlement to claim interest after three months from the date of the refund application until realization, in line with previous decisions of the Tribunal and the Supreme Court.

The judgment was pronounced in open court on 31.03.2023.