Reimbursement of service tax under VCES required discharge certificate first; no interest was payable before reimbursement.

A contractual reimbursement claim for service tax under the Voluntary Compliance Encouragement Scheme depended on furnishing documentary proof, including the discharge certificate in Form VCES-3. The scheme and its circular made the declaration conclusive only after full payment of tax dues with interest, if any, and issuance of the discharge certificate. Because the claimant paid in instalments, did not produce the certificate when reimbursement was sought, and supplied it only later in writ proceedings, reimbursement was made only after that production. On those facts, the Calcutta HC found no basis to award interest for the period before reimbursement, and the plaintiff was not entitled to interest on the reimbursed amount.

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Issues: Whether the plaintiff was entitled to interest on the reimbursement of service tax paid under the Voluntary Compliance Encouragement Scheme, and consequentially whether the suit claim was maintainable.

Analysis: The contractual clauses provided for reimbursement of service tax on production of documentary evidence, but the defendant required the original discharge certificate in Form VCES-3 because the scheme declared that a declaration would become conclusive only upon issuance of the acknowledgement of discharge. The circular issued under the scheme clarified that CENVAT credit and related reimbursement consequences would follow only after payment of the tax dues in full with interest, if any, and issuance of the discharge certificate. On the facts, the plaintiff paid the service tax in instalments, sought reimbursement without furnishing the discharge certificate at the relevant time, and produced it only later in the writ proceedings. The defendant reimbursed the tax after the certificate was produced pursuant to the writ order. In these circumstances, no basis was made out to award interest for the period before reimbursement.

Conclusion: The plaintiff was not entitled to interest on the reimbursed service tax amount.

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