2024 (11) TMI 549 - AT - Service Tax

Service tax refund interest mandatory after three months under Section 11BB despite revenue delays

DSS Image Tech Private Limited Versus Commissioner of Central Goods, Service Tax, Delhi East

DSS Image Tech Private Limited Versus Commissioner of Central Goods, Service Tax, Delhi East - TMI Issues:1. Payment of interest on delayed refund of service tax beyond three months from the date of filing the refund application.2. Interpretation of Section 11BB of the Central Excise Act in relation to the payment of interest on delayed refunds.Detailed Analysis:1. The judgment revolves around the issue of payment of interest on delayed refund of service tax beyond the three-month period from the date of filing the refund application. The appellant had filed a rebate claim, which was initially dismissed on the ground of being time-barred. However, in a previous round of litigation, the Tribunal allowed the rebate claim, but interest on the refunded amount was not granted by the adjudicating authority. The Commissioner (Appeals) partially allowed interest from three months after a fresh application was filed till the refund payment date, which the appellant contested. The appellant argued that the refund application was complete when initially filed, citing relevant case law to support their claim for interest on delayed refund.2. The Tribunal analyzed the provisions of Section 11BB of the Central Excise Act, which governs the payment of interest on delayed refunds. The Tribunal referred to the interpretation of Section 11BB by the Hon'ble Apex Court in the case of Ranbaxy Laboratories Limited, emphasizing that interest becomes payable if the claimed amount is not refunded within three months from the date of the refund application. The explanation to Section 11BB clarifies that interest becomes payable after three months from the application date, irrespective of the authority making the refund order. The Tribunal concluded that the appellant was entitled to interest on the delayed refund from three months after the initial refund application date until the actual payment date.3. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order and ruled in favor of the appellant, directing the revenue to make good the shortfall in interest paid to the appellant. The jurisdictional authority was instructed to comply with the directive within four months from the date of the Tribunal's order. The judgment highlights the importance of adhering to statutory provisions regarding the payment of interest on delayed refunds and ensures that the appellant receives the entitled interest amount based on the legal interpretation provided by the Tribunal and supported by relevant case law.