2024 (11) TMI 549 - AT - Service Tax

Payment of interest on delayed refund of service tax - beyond the expiry of three months from the date of filing of refund application for the first time, by the appellant on 29.06.2007 - second round of litigation before the Tribunal - HELD THAT - The question with regard to payment of interest on delayed refund is categorically covered in terms of Section 11BB of the Central Excise Act as made applicable to service tax matters. The provisions concerning payment of interest on delayed refund automatically get attracted 3 months from the date of the order of the Tribunal permitting the said refund claim. This however automatically rolls back for the purpose of this Section under Sub-section 2 of Section 11B. The explanation to Section 11BB has nothing to do with the postponement with the said date. As it is an undisputed fact that the refund application was filed by the appellant on 29.06.2007, the appellant is entitled to payment of interest at applicable rates, three months from the said date of receipt of the said refund application, till the time the same was paid. The order of the Commissioner (Appeals) is set-aside and the appeal succeeds on merits. The revenue is directed to make good the shortfall in interest amount paid to the appellant.

Summary

Issues:
1. Payment of interest on delayed refund of service tax beyond three months from the date of filing the refund application.
2. Interpretation of Section 11BB of the Central Excise Act in relation to the payment of interest on delayed refunds.

Detailed Analysis:
1. The judgment revolves around the issue of payment of interest on delayed refund of service tax beyond the three-month period from the date of filing the refund application. The appellant had filed a rebate claim, which was initially dismissed on the ground of being time-barred. However, in a previous round of litigation, the Tribunal allowed the rebate claim, but interest on the refunded amount was not granted by the adjudicating authority. The Commissioner (Appeals) partially allowed interest from three months after a fresh application was filed till the refund payment date, which the appellant contested. The appellant argued that the refund application was complete when initially filed, citing relevant case law to support their claim for interest on delayed refund.

2. The Tribunal analyzed the provisions of Section 11BB of the Central Excise Act, which governs the payment of interest on delayed refunds. The Tribunal referred to the interpretation of Section 11BB by the Hon'ble Apex Court in the case of Ranbaxy Laboratories Limited, emphasizing that interest becomes payable if the claimed amount is not refunded within three months from the date of the refund application. The explanation to Section 11BB clarifies that interest becomes payable after three months from the application date, irrespective of the authority making the refund order. The Tribunal concluded that the appellant was entitled to interest on the delayed refund from three months after the initial refund application date until the actual payment date.

3. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order and ruled in favor of the appellant, directing the revenue to make good the shortfall in interest paid to the appellant. The jurisdictional authority was instructed to comply with the directive within four months from the date of the Tribunal's order. The judgment highlights the importance of adhering to statutory provisions regarding the payment of interest on delayed refunds and ensures that the appellant receives the entitled interest amount based on the legal interpretation provided by the Tribunal and supported by relevant case law.