2024 (1) TMI 302 - HC - Service Tax

Interest not awarded on the amount of service tax refunded - Section 11BB of CEA, 1944 - HELD THAT - It was held in section 11BB that any duty which is ordered to be refunded under Section 11B(2) to any applicant, must be refunded within a period of three months, from the date of receipt of any application in this regard, failing which, interest shall forthwith accrue on the amount liable to be refunded. In the facts and circumstances of the present case, it is clear that the petitioner filed an application for refund of Rs. 14,42,900/- on 18.10.2021, pursuant to which, the refund was sanctioned on 08.12.2021 i.e. within the statutorily prescribed time period of effectuating refund within 3 months from the date of receiving an application to that effect. Therefore, having satisfied the requirement of effectuating refund within the prescribed time period, no liability qua awarding interest in favour of the petitioner, accrues. Considering the fact that the Act of 1944 is a self-contained code, which provides a definite and systemic mechanism for the recovery of demand and the consequential refund thereof, this Court cannot issue directions dehors the law whilst disregarding the statutorily prescribed mechanism mandatorily required to be followed in cases of refund. Petition dismissed.

Summary

Issues:
The central grievance is the non-award of interest on the refunded service tax amount. The petitioner seeks interest compensation for loss of working capital due to the delay in refund.

Factual Narrative:
- Search conducted at petitioner's premises, resulting in collection of sum against service tax liability.
- Department issued show cause notice and demand order for a reduced amount.
- Petitioner filed appeal against demand order, which was decided in their favor.
- Petitioner applied for refund of excess amount, along with interest, which was rejected initially.
- Subsequent appeals and applications led to refund of excess amount but without interest, leading to the current petition.

Arguments:
- Petitioner argues for interest based on equity, citing undue harassment and financial loss due to delay in refund.
- Respondents rely on provisions of Section 11B and 11BB of the Central Excise Act, stating no liability for interest as refund was made within prescribed period.

Judgment:
- Section 11BB mandates refund within 3 months of application, failing which interest accrues.
- Refund to petitioner was made within prescribed time period, hence no liability for interest.
- Court upholds self-contained mechanism of Act of 1944 for refunds, dismissing the petition.
- Petitioner granted liberty to represent procedural delays to higher authorities for necessary action.

Conclusion:
The petition is dismissed, pending applications disposed of.