Interest on service tax refund denied where refund was sanctioned promptly after Tribunal order and Board circular was followed.

Interest was not payable on a service tax refund where the refund arose from an earlier Tribunal order and the department sanctioned payment within three months of receiving that order. The Tribunal noted that the refund followed the appellate order dated 30-11-2006, was processed promptly, and there was no strong basis to award interest in these circumstances. The departmental action was also consistent with the Board circular governing such refunds, so no interest liability attached to the refunded amount.

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Issues: Whether interest was payable on the refunded service tax amount when the refund was granted within three months of receipt of the Tribunal's order by the department.

Analysis: The refund arose only because of the Tribunal's earlier order. The department received that order on 30-11-2006 and sanctioned the refund within three months thereafter. The Tribunal held that, in these circumstances, there was no strong basis for awarding interest, and the departmental action was consistent with the Board's circular governing such refunds.

Conclusion: Interest on the refunded amount was not payable.

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