Statutory refund mechanism requires proof of tax payment and limits delayed-refund interest to the prescribed post-application period.

Service tax refund claims require documentary proof that the tax was actually paid to the Government; a claimant's asserted deduction by the awarder, without challans, certificates or equivalent primary evidence, does not establish entitlement and the unsupported refund amounts were denied. Voluntarily paid tax under self-assessment remains subject to the statutory refund mechanism even if later claimed as paid under a mistake of law. Interest on delayed sanctioned refunds accrues only after three months from receipt of the refund application, at the notified statutory rate; interest from the tax-payment date or compensatory interest outside that framework is unavailable.

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Issues: (i) Whether refund amounts withheld for want of evidence that service tax deducted by the Rajasthan Housing Board was deposited with the Revenue were admissible; (ii) Whether interest on the refunded service tax was payable at 12% from the dates of tax payment, or only at the statutory rate after the prescribed period from the refund applications.

Issue (i): Whether refund amounts withheld for want of evidence that service tax deducted by the Rajasthan Housing Board was deposited with the Revenue were admissible.

Analysis: A refund claimant must furnish documentary evidence establishing payment of the duty or tax claimed as refund. The narration in a show-cause notice of the claimant's assertion that tax had been deducted by the awarder does not establish actual deduction, deposit in the Government account, or absence of a separate refund to the awarder. No challans, certificates, or equivalent primary evidence established the relevant payments.

Conclusion: The withheld refund amounts were correctly denied for lack of documentary proof of duty payment, against the assessee.

Issue (ii): Whether interest on the refunded service tax was payable at 12% from the dates of tax payment, or only at the statutory rate after the prescribed period from the refund applications.

Analysis: Refund claims for tax voluntarily paid under self-assessment fall within the statutory refund mechanism. Such payments cannot be treated as revenue deposits merely because they were subsequently asserted to have been made under a mistake of law. Interest on delayed refund accrues only after expiry of three months from receipt of the refund application, and the Tribunal cannot award equitable or compensatory interest beyond the statutory framework. The record showed that the refunds were ultimately made pursuant to the appellate orders, beyond the statutory three-month period.

Conclusion: The appellants are entitled to interest at 6% per annum from expiry of three months after their respective refund applications until payment of the sanctioned refunds, in favour of the assessee; interest at 12% from the dates of tax payment is denied.

Final Conclusion: The statutory refund regime governs both the evidentiary entitlement to refund and interest for delay; only proven refund claims qualify, and delayed payment of sanctioned refunds attracts interest at the notified statutory rate.

Ratio Decidendi: Tax voluntarily paid under self-assessment and claimed back as refund remains governed by the statutory refund provisions, and interest is payable only at the notified rate from expiry of three months after receipt of a valid refund application.

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