refund of deposit in service tax

[samir agrawal]

Is the circular granting 6% interest as per Sec 35FF on refund of pre-deposit binding on the department or Tribunal?

Can interest be claimed at 12%?

Any case laws?

Experts pls advice

[Amit Agrawal]

One does not get inherent right to claim interest @ 12% where law specifically provides for interest @ 6% while refund pre-deposit made for filing appeal.

It is worth noting that rate of interest @ 6% is as per Notification No. 24/2014 – CE (N.T.) dated 12.08.2021 which is issued In exercise of powers conferred by section 35FF of the Central Excise Act, 1944 (1 of 1944).

Constitutional courts - in few cases - has granted higher rate of interest. But, in those case, generally specking, Dept. was at serious fault such as inordinate delay in granting refund without any adequate reason etc.

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[Amit Agrawal]

Please read as '....... dated 12.08.2014 (& not 12.08.2023) ......'

[KASTURI SETHI]

Sh.Samir Agrawal Ji,

Reply to Q.No. 1 : See the following circular.

Binding nature of Circulars and Instructions — Clarification

Circular No. 1006/13/2015-CX, dated 21-9-2015

Reply to Question No.2

Section 35 FF of Central Excise Act was made applicable to Service Tax vide Section 83 of the Finance Act, 1994. Here is the judgement of CESTAT based on the judgement of Supreme Court on this very issue.

2021 (12) TMI 243 - CESTAT NEW DELHI - PR. COMMR. OF CGST, NEW DELHI Versus EMMAR MGF CONSTRUCTION PVT. LTD.

[Shilpi Jain]

Where the law provides for the rate of interest, that can be claimed.

When no rate of tax is mentioned in the law, the Courts can then give a higher rate of interest as well, which was done in some cases in the past.

[Padmanathan KV]

I agree with views of expert that higher rate has to be allowed by Court and cannot be claimed as a matter of right.

AI Summary

Interest on tax refunds: prescribed statutory rate binds claims; higher judicial rates require exceptional administrative delay. The text addresses whether claimants can obtain interest at a higher rate than the rate prescribed by statute and executive instruction on refunds of pre-deposits in service tax. It explains that the prescribed rate is the normal entitlement and that executive circulars are binding on the department, while higher interest has been awarded by courts only in exceptional cases of serious departmental delay or fault. Thus, claimants cannot as of right demand a higher rate absent adjudicated grounds showing administrative culpability.