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2025 (4) TMI 372 - AT - Service TaxRejection of prayer of appellant for interest on delayed sanction of refund - grant of interest from expiry of three months from the date of application till payment of refund in terms of Section 11BB of the Central Excise Act 1944 read with Section 83 of the Finance Act 1994 - HELD THAT - The Hon ble Bombay High Court in the appellant s own case 2019 (3) TMI 349 - BOMBAY HIGH COURT has allowed the interest on delayed sanction of refund. Hon ble Punjab Haryana High Court in the case of Om Refoils Ltd 2018 (2) TMI 36 - PUNJAB AND HARYANA HIGH COURT has held that interest is payable immediately after expiry of three months from the date of application. Hon ble Apex Court in the case of Ranbaxy Laboratories Ltd 2011 (10) TMI 16 - SUPREME COURT has held that interest is payable on the amount refunded to the assessee from the expiry of three months from the date of application till the date of payment of the amount of refund sought under Section 11B of the Central Excise Act. Conclusion - The appellant is entitled to get the interest from the expiry of three months from filing the first application seeking refund at the rate as prescribed under the law. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is whether the appellant is entitled to interest on the delayed sanction of a refund under Section 11BB of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. The core question revolves around the interpretation of the statutory provisions governing the payment of interest on delayed refunds and the timing from which such interest should be calculated. 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents: The legal framework primarily involves Section 11BB of the Central Excise Act, 1944, which mandates the payment of interest on delayed refunds. The section stipulates that interest is payable if the refund is not sanctioned within three months from the date of receipt of the application. The appellant cited several precedents, including decisions by the Supreme Court and High Courts, which have consistently held that interest is payable from the expiry of three months from the date of the refund application. Court's Interpretation and Reasoning: The Tribunal examined the statutory provisions and the precedents cited by the appellant. It noted that the issue of interest on delayed refunds is well-settled by higher courts, including the Supreme Court. The Tribunal emphasized that the liability to pay interest arises from the expiry of three months from the date of receipt of the refund application, not from the date of any subsequent order or action by the revenue authorities. Key Evidence and Findings: The Tribunal found that the appellant had filed the original refund application well before the date considered by the revenue authorities. The Assistant Commissioner had initially rejected the refund claim, which was later sanctioned without interest after a remand from the Commissioner (Appeals). The Tribunal observed that the appellant's entitlement to interest was supported by earlier decisions in similar cases, including a decision in the appellant's own case by the Bombay High Court. Application of Law to Facts: Applying the legal principles established in the cited precedents, the Tribunal concluded that the appellant was entitled to interest on the delayed refund. The Tribunal directed that the interest should be calculated from the expiry of three months from the date of the original refund application, as prescribed under Section 11BB of the Central Excise Act, 1944. Treatment of Competing Arguments: The Tribunal considered the arguments presented by the revenue, which reiterated the findings of the impugned order. However, the Tribunal found these arguments unpersuasive in light of the clear statutory mandate and the consistent judicial interpretation favoring the appellant's position. The Tribunal highlighted that the revenue's interpretation was contrary to the established legal position and the facts of the case. Conclusions: The Tribunal concluded that the appellant was entitled to interest on the delayed refund from the expiry of three months from the date of the original application. The original authority was directed to compute and pay the interest at the prescribed rate. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal quoted the Bombay High Court's decision in the appellant's own case, which stated, "The petitioner is entitled to the interest as claimed. The writ petition is allowed in terms of prayer clause (a). The amount of interest in terms of the legal provisions and as per the prayer be released as expeditiously as possible." Core Principles Established: The Tribunal reaffirmed the principle that interest on delayed refunds is payable from the expiry of three months from the date of receipt of the refund application, as per Section 11BB of the Central Excise Act, 1944. This principle is supported by numerous judicial precedents, including decisions by the Supreme Court and various High Courts. Final Determinations on Each Issue: The Tribunal determined that the appellant is entitled to interest on the delayed refund from the expiry of three months from the date of the original refund application. The original authority was instructed to compute the interest due and ensure its payment in accordance with the prescribed legal rate.
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