2023 (8) TMI 353 - HC - Service Tax

Interest on delayed excise refund must run from expiry of three months after refund application, petition granted.

Interest on delayed excise refunds is payable from the day after the expiry of three months from the date of the refund application where the claim is not ... Denial for petitioner’s claim for interest on refund sanctioned - denial on the ground that the petitioner’s claim was processed within a period of three months from the receipt of its letter - Section 11BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - HELD THAT:- In a case where Revenue denies the claim for refund and the assessee succeeds before the Appellate Authorities, the interest is required to be calculated from the date immediately after the expiry of three months from the date of application for the refund and not from the date of the appellate orders. This issue was settled by the Supreme Court in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT]. Although it was suggested by the learned Counsel for the Revenue that the refund should be calculated from the date after the expiry of three months from the date of the CESTAT Order, that is, three months from the order dated 07.12.2022. The said contention is unmerited and as stated above, the said issue stands authoritatively settled by the Supreme Court in Ranbaxy Laboratories Ltd. - The above question does not arise in the present case as the Adjudicating Authority has correctly proceeded on the basis that the interest under Section 11BB of the Excise Act would be payable from the date immediately after the expiry of three months from the date of application for refund, if the same is not processed within the said period of three months. He has, however, erred in holding that the petitioner’s letter dated 07.02.2023, requesting for processing its claims for refund is to be considered as its application for refund. The impugned order is, ex facie, erroneous to the extent it rejects the petitioner’s claim for interest. The impugned order sets out a tabular statement as reproduced hereinbefore, clearly stating the dates on which the petitioner had made its claim for refund - Petition allowed. Issues involved: The petitioner challenges the denial of interest on refund under Section 11BB of the Central Excise Act, 1944 and Section 83 of the Finance Act in a case involving export of services. The primary contention is the calculation of interest on the refund amount.Details of the judgment:Issue 1: Denial of interest on refund amountThe petitioner, engaged in providing services to an overseas entity, filed applications for refund of unutilised Cenvat Credit for different tax periods. The Adjudicating Authority initially rejected the claim on the ground that the services were provided as an intermediary in India. The petitioner appealed to various authorities, ultimately succeeding before the CESTAT. However, the claim for refund was not processed promptly. The Adjudicating Authority later granted the refund but denied interest, citing that the claim was processed within three months of the petitioner's letter seeking refund. The court held that interest on refund should be calculated from the date immediately after the expiry of three months from the dates of the original refund applications, not from the date of the appellate orders. The Adjudicating Authority erred in considering the petitioner's letter as the refund application. The court directed the Authority to process the petitioner's claim for interest in accordance with the law.Conclusion:The court allowed the petition, directing the Adjudicating Authority to process the petitioner's claim for interest under Section 11BB of the Excise Act and Section 83 of the Finance Act from the correct dates of the original refund applications.