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

Forum Debates Interest Rates on Service Tax Refunds: Is 6% Under Section 35FF Binding or Can 12% Be Claimed? A discussion on a forum addresses the issue of interest rates on refunds of pre-deposits in service tax cases. A participant queries whether the 6% interest rate specified under Section 35FF is binding or if a 12% rate can be claimed. Responses clarify that the 6% rate is set by Notification No. 24/2014 and is generally binding unless a court decides otherwise due to significant departmental delays or faults. The discussion references relevant circulars and case law, emphasizing that higher interest rates are typically court-granted and not an inherent right.