2018 (6) TMI 44 - AT - Service Tax

Refund Interest Starts After Application, Not Deposit Date

Fulchand Tikamchand Versus Commissioner of Cen. Excise & ST, Nagpur

Fulchand Tikamchand Versus Commissioner of Cen. Excise & ST, Nagpur - TMI Issues:1. Entitlement to interest on refund application.2. Interpretation of Section 11BB regarding payment of interest.3. Applicability of judgments cited by both parties.4. Maturity of refund and entitlement to interest.Analysis:Issue 1: Entitlement to interest on refund applicationThe appellant deposited the adjudged dues confirmed by the order-in-original, filed an appeal challenging the demand order, and subsequently filed a refund application after the appeal was allowed. The appellant claimed interest from the date of deposit. The Deputy Commissioner argued that interest is payable under Section 11BB from three months of filing the refund application, not from the date of deposit. The Tribunal observed that interest is payable as per Section 11BB from three months of application filing, not from the date of deposit. The Tribunal distinguished judgments cited by the appellant, emphasizing that interest accrues only after three months from the application date.Issue 2: Interpretation of Section 11BB regarding payment of interestSection 11BB provides for interest on delayed refunds, payable from three months after the application date. The Tribunal held that interest is not payable from the date of deposit but only after three months from the application date. The Tribunal emphasized that it cannot go beyond statutory provisions and must adhere to the specific provisions of the Central Excise Act.Issue 3: Applicability of judgments cited by both partiesThe appellant relied on judgments such as ONGC Ltd. and Futura Ceramics Pvt. Ltd., arguing for interest from the date of deposit. However, the Tribunal distinguished these judgments, stating that they are not applicable in the present case where the refund provision is under Section 11B. The Tribunal also highlighted judgments by the Supreme Court and the Larger Bench of the Tribunal, emphasizing that interest is not payable from the date of deposit.Issue 4: Maturity of refund and entitlement to interestThe Tribunal clarified that the refund becomes matured only as a consequence of the Appellate Tribunal's order. Since the refund was not matured prior to the date of the Appellate Tribunal's order, interest for the period before that date is not applicable. Consequently, the Tribunal dismissed the appeal, stating that the appellant is not entitled to interest from the date of deposit of the demand amount.This detailed analysis of the judgment addresses the issues of entitlement to interest on refund applications, interpretation of Section 11BB, applicability of cited judgments, and the maturity of refunds in relation to interest entitlement.