Tribunal Upholds 6% Interest Rate on Service Tax Refund, Rejecting Appeal for Higher Rate by Developers. The Tribunal rejected the appeal for interest on the refund of service tax deposited by M/s G.S. Promoters and Developers. Despite the appellants' request ...
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Tribunal Upholds 6% Interest Rate on Service Tax Refund, Rejecting Appeal for Higher Rate by Developers.
The Tribunal rejected the appeal for interest on the refund of service tax deposited by M/s G.S. Promoters and Developers. Despite the appellants' request for a 12% interest rate from the date of deposit, the Tribunal upheld the statutory provisions under Section 11B/11BB of the Central Excise Act, 1944, which prescribe a 6% interest rate per annum. The Tribunal concluded that it cannot alter the statutory provisions regarding the date or rate of interest payable on refunds, affirming the Department's position.
Issues involved: Refund of service tax, interest on refund, statutory provisions for interest on refund.
Refund of service tax: The case involved M/s G.S. Promoters and Developers who had not paid service tax amounting to Rs.75,95,723 as per a search conducted by DGCEI. The Commissioner of Central Excise confirmed the non-payment, but the appellants won the appeal. They applied for a refund of Rs.25 Lakhs deposited during the investigation, which was sanctioned by the Assistant Commissioner. However, the issue arose when interest on the refund was not granted by the Commissioner (Appeals).
Interest on refund: The appellants argued that interest should be paid at a rate of 12% from the date of deposit, citing various cases in support. The Department, on the other hand, referred to statutory provisions under Section 11B/11BB of the Central Excise Act, 1944, and Notification No.67/2003-CE (NT) prescribing a 6% interest rate per annum. They also highlighted court judgments emphasizing that interest cannot be granted beyond statutory provisions.
Statutory provisions for interest on refund: The Tribunal analyzed the arguments presented by both parties and referred to relevant judgments, including those of the Hon'ble Apex Court. It was concluded that the provisions in the Central Excise Act regarding interest prevail, and the Tribunal cannot intervene in determining the date or rate of interest payable on refunds under the Act. As a result, the appeal for interest on the refund was rejected.
The judgment was pronounced on 11/12/2023 by Mr. P. ANJANI KUMAR, Member (Technical) at the Appellate Tribunal CESTAT CHANDIGARH.
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