2014 (9) TMI 876 - AT - Service Tax

Tribunal grants interest on refund from claim rectification to receipt date under Central Excise Act

STATE BANK OF INDIA Versus COMMISSIONER OF SERVICE TAX, MUMBAI-I

The Tribunal allowed the appeal in favor of the appellant, determining that interest on the refund should commence from the date when the deficiency in ... Interest on delayed payment of refund claim - Held that:- appellant filed the refund claim for the service tax paid in excess. This fact is not in dispute. Therefore, as per the provisions of Section 11B of the Central Excise Act, 1944 they are entitled for the interest from three months after the date of filing of the refund claim till the receipt of the refund. - appellants were issued deficiency memo since they have not filed the refund claim complete in all respects and they have filed refund claim after removing the deficiency in all respects only on 26-3-2009. This fact is also not in dispute. Therefore, the interest on the refund will commence three months after the date of removal of deficiency in the claim i.e. from 26-3-2009 till the date of receipt of the refund. - Decided in favour of assessee. Issues:1. Refund claim rejection and interest entitlement under Section 11BB of the Central Excise Act, 1944.Analysis:The appellant filed a refund claim for excess service tax payment, which was initially rejected by the lower adjudicating authority. The Commissioner (Appeals) later allowed the refund claim but rejected the appellant's claim for interest. The appellant contended that they were entitled to interest as per Section 11BB of the Central Excise Act, 1944, citing relevant legal precedents. The Additional Commissioner argued that the deficiency memo issued to the appellant delayed the refund process.Upon reviewing the submissions and records, the Tribunal observed that the appellant indeed filed a refund claim for excess service tax paid. The Tribunal noted that as per Section 11B of the Central Excise Act, 1944, the appellant was entitled to interest from three months after the date of filing the refund claim until the receipt of the refund. The Tribunal referenced the decision of the Hon'ble Supreme Court in a similar case to support this interpretation.While acknowledging the legal precedent cited by the appellant, the Tribunal also considered the undisputed fact that the deficiency memo had caused a delay in the refund process. Consequently, the Tribunal determined that interest on the refund should commence three months after the date when the deficiency in the claim was rectified, i.e., from 26-3-2009 until the date of refund receipt. Based on this analysis, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.