2024 (2) TMI 372 - AT - Service Tax

Interest on delayed payment of refund - HELD THAT - The said issue has been examined by this Tribunal in the case of Tribunal in the case M/s. Fujikawa Power and other vs. CCE, Chandigarh-I 2019 (11) TMI 1197 - CESTAT CHANDIGARH wherein this Tribunal has observed appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum. The appellant is held entitled for the interest on the amount of refund sanctioned at the rate of 12% to be calculated from the date of payment till the date of disbursement. Appeal allowed.

Summary

Issues Involved:
1. Entitlement to interest on the amount sanctioned as a refund.
2. Rate of interest and the period for which it should be calculated.

Summary:

Issue 1: Entitlement to Interest on Refund

The appellants, engaged in managing malls, contested the denial of interest on a refunded amount of Rs.7,15,09,643/-, which was initially deposited during an investigation. The refund was sanctioned without interest, leading to the appeal. The Tribunal noted that the refund claim was filed within the permissible time limit and was not affected by the clause of unjust enrichment. The Tribunal referenced several decisions, including Parle Agro (P) Ltd vs. Commissioner CGST, Noida, and others, to establish that the issue of granting interest on refunded amounts is well-settled. The Tribunal concluded that the findings of the Hon'ble Supreme Court in the Mafatlal Industries case do not apply to this case.

Issue 2: Rate of Interest and Calculation Period

The Tribunal observed that the Adjudicating Authority had incorrectly invoked section 11B/11BB of the Central Excise Act, which pertains only to the refund of excise duty, not amounts collected without authority. The Tribunal relied on section 35FF of the Central Excise Act and the decision in Sandvik Asia Limited, which mandates interest on delayed refunds. The Tribunal also cited the case of Sony Pictures Networks India Pvt. Ltd., which upheld a 12% interest rate on delayed refunds. Based on these precedents, the Tribunal held that the appellants are entitled to interest at 12% per annum, calculated from the date of deposit until the date of refund disbursement.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal, directing the department to pay interest at 12% per annum on the refunded amount from the date of deposit until the date of disbursement.