Interest on delayed refund affirmed: entitlement to interest from payment date until disbursement, appeal allowed

Appellants are entitled to interest on delayed payment of refund; the Tribunal applied precedent reasoning that interest accrues from the date of initial payment until the date of disbursement, at the rate specified by the prior authority, and directed calculation and payment of interest on the sanctioned refund. The operative effect is that the refund claimant receives interest on the refunded amount for the interregnum between payment and disbursement, and the appeal was allowed to secure that monetary relief.

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Issues Involved:
1. Entitlement to interest on the amount sanctioned as a refund.
2. Rate of interest and the period for which it should be calculated.

Summary:

Issue 1: Entitlement to Interest on Refund

The appellants, engaged in managing malls, contested the denial of interest on a refunded amount of Rs.7,15,09,643/-, which was initially deposited during an investigation. The refund was sanctioned without interest, leading to the appeal. The Tribunal noted that the refund claim was filed within the permissible time limit and was not affected by the clause of unjust enrichment. The Tribunal referenced several decisions, including Parle Agro (P) Ltd vs. Commissioner CGST, Noida, and others, to establish that the issue of granting interest on refunded amounts is well-settled. The Tribunal concluded that the findings of the Hon'ble Supreme Court in the Mafatlal Industries case do not apply to this case.

Issue 2: Rate of Interest and Calculation Period

The Tribunal observed that the Adjudicating Authority had incorrectly invoked section 11B/11BB of the Central Excise Act, which pertains only to the refund of excise duty, not amounts collected without authority. The Tribunal relied on section 35FF of the Central Excise Act and the decision in Sandvik Asia Limited, which mandates interest on delayed refunds. The Tribunal also cited the case of Sony Pictures Networks India Pvt. Ltd., which upheld a 12% interest rate on delayed refunds. Based on these precedents, the Tribunal held that the appellants are entitled to interest at 12% per annum, calculated from the date of deposit until the date of refund disbursement.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal, directing the department to pay interest at 12% per annum on the refunded amount from the date of deposit until the date of disbursement.

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