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2023 (10) TMI 888 - AT - Service TaxRelevant time for calculation of interest on delayed refund - interest is payable after three months from the date of filing of refund application in terms of Section 11BB of the Central Excise Act, 1944 or from the date of order of this Hon ble Tribunal allowing the refund claim? HELD THAT - As per the section 11BB the assessee is entitle for the interest on the refund after three months from the date of filing of application for refund. In the present case there is no dispute that after making suo-moto payment of Service Tax, the appellant first time filed the refund application on the various dates as given in the respective refund claims filed first time. It is these dates on which the refund applications were filed. Accordingly, as per the Section 11BB the appellant are entitled for the interest after three months from such dates of filing the refund applications. The contention of the Revenue which is based on sub clause (ec) of clause (B) of Sub Section (5) of the Section 11B of the Central Excise Act, 1944 shall apply only in a case where there is a demand case where initially the demand is confirmed by the lower Authority, and when the same is set aside by the Tribunal /High Court /Supreme Court then only refund arises. In such case only, after setting aside the demand the refund arises out of such order by which demand was set aside and in that case only the interest is payable from the three months after the date of order of Tribunal/High Court/Supreme Court as the case may be. However, the contention of the revenue does not apply in a case where there is no demand but the case is of refund of suo-moto payment of service tax - Accordingly, the appellant is legally entitled for the interest after three months from the date of application for refund made first time. This issue has been considered in various judgments particularly in the Apex Court judgment of Ranbaxy Laboratories Ltd. 2011 (10) TMI 16 - SUPREME COURT , wherein it was 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 fact of the present case is identical to the facts in the aforesaid Hon ble Supreme Court judgment, in the above judgment also it was the department s contention that the interest is payable from the date of refund order. Hence the ratio of the aforecited Apex Court judgment is directly applicable. In the present case also the department is considering the date after the Tribunal has passed the order - there is absolute no doubt that the appellant is entitled for the interest after three months from the date of refund applications as mentioned in respective refund applications filed first time after suo-moto payment of Service Tax and interest thereon. In the facts of the present case this Tribunal can order for grant of interest only in terms of section 11BB and not beyond that. Needless to say that the Appellant have liberty to approach the Hon ble High court for the interest from the date of deposit till the date which is after three months from the date of filing of application. Appeal allowed.
Issues Involved:
1. Whether interest on delayed refund is payable after three months from the date of filing of refund application in terms of Section 11BB of the Central Excise Act, 1944, or from the date of the order of the Tribunal allowing the refund claim. Summary: Issue 1: Interest on Delayed Refund 1. Facts of the Case: - The appellant, engaged in manufacturing pharmaceutical products and providing Business Auxiliary Services, formed a partnership firm and paid service tax on remuneration received from the firm under a mistaken belief. - The appellant also paid service tax on royalty received under a Trade Mark License Agreement with the firm, believing it was classifiable under Intellectual Property Service. - Upon realizing the error, the appellant filed several refund claims for the erroneously paid service tax. 2. Procedural History: - Various Show Cause Notices (SCNs) were issued, proposing to reject the refund claims. - Orders-in-Original confirmed the proposals, and the appellant's appeals to the Commissioner (Appeals) were dismissed. - The Tribunal, in a Final Order dated 27.04.2021, held the appellant was not liable to pay service tax, and the service tax paid was refundable. - The High Court of Gujarat dismissed the Revenue Department's appeals against this order. - The appellant filed for the release of the refund, which was sanctioned by the Assistant Commissioner, who calculated interest from the date of the refund application received on 05.04.2022. 3. Appellant's Argument: - The appellant argued that interest should be calculated from the expiry of three months from the date of the original refund application, citing the Supreme Court judgment in Ranbaxy Laboratories Ltd. vs. Union of India. - The appellant contended that the relevant date for interest calculation should be from the date of the original refund application and not from the date of the Tribunal's order. 4. Respondent's Argument: - The respondent argued that the refund was crystallized only after the Tribunal's order dated 27.04.2021, and the date of the refund application should be considered as 04.04.2022. 5. Tribunal's Analysis: - The Tribunal referred to Section 11BB of the Central Excise Act, which states that interest on delayed refunds is payable after three months from the date of receipt of the refund application. - The Tribunal noted that the appellant's refund application dates back to the original filing and not the subsequent request for release. - The Tribunal cited the Supreme Court's judgment in Ranbaxy Laboratories Ltd. and other relevant case laws, affirming that interest is payable from three months after the date of the original refund application. 6. Conclusion: - The Tribunal concluded that the appellant is entitled to interest from three months after the date of the original refund application. - The impugned orders were set aside, and the appeals were allowed in favor of the appellant. Pronounced in the open court on 18.10.2023.
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