Appellant wins refund claim appeal for service tax pre-deposit interest entitlement.

The appeal was allowed in favor of the appellant regarding a refund claim of service tax. The appellant was entitled to interest from the date of deposit till realization as the amount paid during investigation was considered a pre-deposit. The Member (Judicial) found that interest should be paid on such pre-deposit amounts to the successful appellant, contrary to the Commissioner (Appeals)' decision. Consequently, the impugned order was set aside, and the appeal was allowed on 22.12.2022.

---

---

Issues:
Refund claim of service tax with interest, applicability of interest on delayed refund, interpretation of Section 11BB of the Central Excise Act, 1944.

Analysis:
The appeal was filed against the Order-in-Appeal passed by the Commissioner (Appeals), Ahmedabad, regarding a refund claim of service tax. The appellant filed a refund claim of Rs. 91,23,906/- on account of an appeal allowed in their favor by CESTAT. The appellant provided services under "Erection, Commissioning, or Installation Service." A show cause notice was issued for non-payment of service tax, and after investigation, the appellant paid Rs. 51,16,092/-. The Tribunal held that the appellant was not liable to pay service tax. The appellant claimed a refund, which was granted, but interest on delayed refund was denied based on Section 11BB of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the decision, stating that interest liability arises only after 3 months from the date of the refund application.

The appellant contended that interest should be paid from the date of payment of duty to the date of refund, citing relevant legal precedents. The Authorized Representative for the department supported the impugned orders. After hearing both sides, the Member (Judicial) found that the amount paid by the appellant as service tax during the investigation was a pre-deposit. As the Tribunal's order had attained finality, the appellant was entitled to claim interest from the date of deposit till realization. Referring to a Division Bench ruling, it was established that interest is payable on such pre-deposit amounts to the successful appellant. Therefore, the Member (Judicial) held that the impugned order was not sustainable in the eyes of the law.

Accordingly, the impugned order was set aside, and the appeal was allowed. The judgment was pronounced in the open court on 22.12.2022.

---