Interest payable under Section 11BB starts upon refund application, not appellate approval.

The Tribunal held that interest under Section 11BB becomes payable three months from the date of the refund application, regardless of the approval date by the appellate authority. Relying on the Supreme Court's precedent, the Tribunal allowed the appeal by the cooperative bank, setting aside the order that questioned the interest refund, and granting relief to the appellant.

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Issues:
1. Determination of the starting point for the payment of interest under Section 11BB - from the date of refund application or from the date of approval by the appellate authority.

Analysis:
The appeal revolved around the question of when interest under Section 11BB becomes payable - whether from the date three months expire from the refund application or from the date of approval by the appellate authority. The appellant, a cooperative bank, filed a refund claim of &8377; 1,80,210/- for service tax paid erroneously, which was initially rejected by the Assistant Commissioner. However, the Commissioner (Appeals) allowed the appeal, leading to the refund being sanctioned along with interest of &8377; 17,241/-. Subsequently, a review by the department resulted in a show cause notice questioning the interest refund. The Commissioner (Appeals) then set aside the rectification order, prompting the appellant to appeal to the Tribunal.

The Tribunal referred to the Supreme Court's ruling in Ranbaxy Laboratories Ltd. vs. Union of India, emphasizing that interest under Section 11BB becomes payable three months from the date of the refund application if the amount claimed remains unpaid. The Explanation to Section 11BB clarifies that if the refund order is made by a higher authority or court, it is deemed to be under Section 11B. However, this Explanation does not impact the commencement of interest payment. The Tribunal, aligning with the Supreme Court's interpretation, held that interest becomes payable after three months from the refund application date, irrespective of the appellate authority's approval date. Consequently, the appeal was allowed, and the impugned order was set aside, granting relief to the appellant cooperative bank.

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