Interest on delayed service tax refund for SEZ-linked services applies under the refund framework and Section 11BB.

Interest was payable on a belatedly sanctioned refund of service tax relating to services rendered to an SEZ unit under Notification No. 15/2009-ST. The refund mechanism was treated as implementing the exemption available to SEZ units, and the applicable Board circular required prompt processing of such claims. Delay in sanction therefore attracted the statutory consequence of interest. Section 11BB was applied on the basis that interest follows late refund even where the notification does not expressly provide for it, and the Rule 5 refund mechanism was treated as materially analogous to other refund provisions already recognised as attracting interest.

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Issues: Whether interest was payable on refund of service tax sanctioned belatedly in respect of services rendered to an SEZ unit under Notification No. 15/2009-ST.

Analysis: The refund claim arose from service tax paid on services rendered to an SEZ unit, and the notifications issued for such refunds were treated as implementing the exemption available to SEZ units. The prescribed Board circular required such refund claims to be processed within a short time frame, and the delay in sanctioning the refund attracted the statutory consequence of interest. The Tribunal also relied on the settled position that where refund is sanctioned late, Section 11BB applies even if the relevant notification does not expressly provide for interest, and that the refund mechanism under Rule 5 is materially analogous to other refund provisions already held to attract interest.

Conclusion: Interest was payable on the belatedly sanctioned refund, and the Revenue's appeal failed.

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