Service tax refund collected without authority of law was not time barred, and statutory interest followed on the sanctioned refund.

Refund of service tax collected without authority of law was held not to be defeated by the ordinary limitation under section 11B where the assessee had promptly sought the relevant order after payment, so the claim was not time barred and was allowable. Once the refund was sanctioned, statutory interest followed under section 11BB on the delayed amount, making interest payable on the sanctioned refund. The result was refund of the disputed amount together with statutory interest.

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Issues: (i) Whether the refund claim in respect of service tax collected without authority of law was barred by limitation under section 11B; (ii) whether interest was payable on the refund already sanctioned.

Issue (i): Whether the refund claim in respect of service tax collected without authority of law was barred by limitation under section 11B.

Analysis: The claim arose from tax collected though not payable in law, and the record showed that the appellant had sought the relevant assessment or adjudication order within a short time after payment. In such circumstances, the limitation prescribed for a normal duty refund was held not to defeat restitution where the amount had been collected without legal authority. The refund was therefore not treated as time barred.

Conclusion: The refund claim was not barred by limitation and was allowable.

Issue (ii): Whether interest was payable on the refund already sanctioned.

Analysis: Once the refund stood sanctioned under section 11B, statutory interest followed under section 11BB. The liability to pay interest attached to the delayed refund amount in accordance with the applicable service tax framework.

Conclusion: Interest was payable on the sanctioned refund.

Final Conclusion: The assessee was entitled to refund of the disputed amount along with statutory interest, and the appeal succeeded.

Ratio Decidendi: A refund of tax collected without authority of law is not defeated by the ordinary refund limitation under section 11B, and once refund is admissible, statutory interest is payable under section 11BB.

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