TaxTMI 
TaxTMI 
2023 (10) TMI 888
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....ided that the Appellant will be an active partner of the firm providing market infrastructure, product development and its promotion, etc. The Appellant received remuneration from the firm for carrying out the aforementioned activities and discharged Service Tax on the said remuneration. The Appellant did not collect the Service Tax from the firm. However, the above Service Tax was paid under the mistaken belief that the Appellant and the Firm are distinct persons and the Appellants are rendering "Business Auxiliary Services". The Appellants were advised by their legal consultants that it cannot be said that being a partner of the firm the Appellant rendered any service to the firm and any remuneration received by them cannot be considered as payment received for any service provided to the firm. 1.2 The Appellant had also entered into a Trade Mark License Agreement with the Firm, in terms of which, the Appellant own the rights in the trademarks in respect of goods set out as Annexure in the Agreement. The Firm desired to obtain a license from the Appellant to use the licensed trademarks in respect of the products in connection with the Firms business in India. In considera....
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.... 27.04.2021, the Revenue Department preferred separated tax appeals before the Hon'ble High Court of Gujarat. The Hon'ble High Court of Gujarat, vide judgment dated 30.03.2022 dismissed the appeals filed by the Revenue Department. 1.5 On 04.04.2022, the Appellant filed letter for release of refund of Service Tax paid by them in view of the Final Order dated 27.04.2021 passed by the CESTAT. On 30.05.2022, the Appellant received a letter for personal hearing in respect of refund arising out of Order of the Tribunal dated 27.04 2021. 1.6 The Learned Assistant Commissioner, CGST, Division-VII, Ahmedabad - South, vide Orders-in-Original dated 29.11.2022 and 13.12.2022 sanctioned the refund claims under Section 11B of the Central Excise Act, 1944. In the given Orders-in-Original, Ld. Assistant Commissioner observed that the Appellant are eligible for interest under Section 11BB of Central Excise Act, 1944 after three months from filing of the Applications for refund i.e., 05.04.2022, which is when the Application dated 04.04.2022 filed by the Appellant was received by the office of Ld. Commissioner. 1.7 The Appellant submitted a letter on 06.01.2023 to the Ld. Assistant Commissi....
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.... of filing of the Refund Claim. 2.2 He submits that Ld. Appellate Authority erred in observing that the Appellant became eligible for refund of the service tax as a consequence of the Order dated 27.04.2021 passed by this Hon'ble Tribunal. The Appellant are entitled to the interest from the expiry of three months from the date of refund application i.e. 11.01.2011 and not from 27.07.2021 i.e., three months from the date of favorable Final Order passed by this Tribunal. Despite the detailed submissions by the Appellants, the Impugned Orders proceed on the premise that interest on the delayed refund should be granted after three months from the date of Final Order passed by this Tribunal. Therefore, the interest on delayed refund should be calculated from the expiry of three months from the date of application i.e., 11.01.2011. 2.3 He submits that the Impugned Orders refer to the definition of relevant date under Explanation (B)(ec) to Section 11B of the Central Excise Act, 1994 for determining the date of receipt of application of refund under Section 11BB of the Central Excise Act, 1944. The Appellant submit that the reliance placed on the said provision by the Ld. Appel....
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....ases cited by the Appellants on the ground that they are applicable in the facts and circumstances of the cases. 2.8 He submits that Learned Appellate Authority, at Para 7 in the Impugned Order has wrongly reasoned that the above-mentioned judgement of Ranbaxy Laboratories Ltd. (supra) is not applicable on the ground that the cited case deals with delay of sanction of rebate while the present case is related to the refund claimed in respect of the service tax self-assessed and paid. Additionally, the Ld. Appellate Authority is also incorrect in their reasoning that the cases relied upon by the Appellant did not involve any issue of taxability and refund consequent to the determination of taxability. 2.9 He further submits that the case of Ranbaxy Laboratories (supra) is applicable in the present case. The given case though the case before the Hon'ble Supreme Court was about delay sanction of the rebate, the ratio of the case discusses the interpretation and application of the Section 11BB of the Central Excise Act, 1944. In view of the above submissions and settled position of law, the Impugned Order has erred in its reasoning that the judgement in case of Ranbaxy Laboratorie....
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....ase whereby in the refund matter only the appeals were allowed. Thereafter, the revenue filed civil appeals before the Hon'ble High Court of Gujarat and the High Court has upheld the order of this Tribunal dated 27.04.2021. Subsequently, the appellant approached department for release of their refund which were already filed. It is those refund applications which are finally decided by the department and sanctioned the refund. Now the issue before us is as to from which date the appellant is entitled for interest on the refund already sanctioned. The provision for grant of interest on refund is provided under section 11BB of the Central Excise Act, 1944, which is applicable in the matter of Service Tax by virtue of Section 83 of Finance Act, 1994. The said section 11BB is reproduced below: Section 11BB in the Central Excise Act, 1944 11BB. Interest on delayed refunds.-If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent. and not exc....
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....es of filing their refund applications. Therefore it is not the date of the letter dated 04.04.2022 the date of applications, whereas, the actual date of application is the dates when first time refund applications were filed and as per section 11BB the appellant are entitled for interest on the refund after three months from the date of such applications. 4.2 The contention of the Revenue which is based on sub clause (ec) of clause (B) of Sub Section (5) of the Section 11B of the Central Excise Act, 1944 shall apply only in a case where there is a demand case where initially the demand is confirmed by the lower Authority, and when the same is set aside by the Tribunal /High Court /Supreme Court then only refund arises. In such case only, after setting aside the demand the refund arises out of such order by which demand was set aside and in that case only the interest is payable from the three months after the date of order of Tribunal/High Court/Supreme Court as the case may be. However, the contention of the revenue does not apply in a case where there is no demand but the case is of refund of suo-moto payment of service tax. Accordingly, the appellant is legally entitled....
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....cise under the foregoing provisions of this subsection shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to----- (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's current account maintained with the Commissioner of Central Excise; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (f) the duty of excise and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by noti....
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....tion." 9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes pay....
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....the notified rate. Board has been receiving a large number of representations from claimants to say that interest due to them on sanction of refund/rebate claims beyond a period of three months has not been granted by Central Excise formations. On perusal of the reports received from field formations on such representations, it has been observed that in majority of the cases, no reason is cited. Wherever reasons are given, these are found to be very vague and unconvincing. In one case of consequential refund, the jurisdictional Central Excise officers had taken the view that since the Tribunal had in its order not directed for payment of interest, no interest needs to be paid. 2. In this connection, Board would like to stress that the provisions of section 11BB of Central Excise Act, 1944 are attracted automatically for any refund sanctioned beyond a period of three months. The jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest. Simultaneously, Board would like to draw attention to Circular No.398/31/98-CX, dated 2-6-98 [199....
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....ing point of liability to pay interest, notwithstanding the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant needs no interference." The special leave petition is dismissed. No costs." 14. At this stage, reference may be made to the decision of this Court in Shreeji Colour Chem Industries (supra), relied upon by the Delhi High Court. It is evident from a bare reading of the decision that insofar as the reckoning of the period for the purpose of payment of interest under Section 11BB of the Act is concerned, emphasis has been laid on the date of receipt of application for refund. In that case, having noted that application by the assessee requesting for refund, was filed before the Assistant Commissioner on 12th January 2004, the Court directed payment of Statutory interest under the said Section from 12th April 2004 i.e. after the expiry of a period of three months from the date of receipt of the application. Thus, the said decision is of no avail to the revenue. 15. In view of the above analysis, our answer to the question formulated in para (1....
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....s from date of receipt of application till the date of refund of duty. 4.5. In the case of CCE, Ahmedabad vs. Olympic Synthetics, 2007 (11) TMI 293, this Hon'ble Tribunal in identical facts, observed that interest has to be quantified from the date of receipt of such application; in as much as the expression used in the said Section is-"receipt of such application" and not as "fresh application" hence, interest is required to be quantified from the date of filing of refund application. 4.6. Similar issue was dealt with by the Hon'ble High Court of Gujarat in the case of Purnima Advertising Agency Pvt. Ltd. and Ors. Vs. Union of India and Ors., 2016 (42) STR 785 (Guj.), the petitioner company had paid excess service tax. The Hon'ble High Court while deciding the matter referred the Ranbaxy Laboratories (Supra) case and observed that on a plain reading of section 11BB of the Central Excise Act, it is evident that the object behind such provision is to provide for payment of interest to a party commencing from a period after three months from the date of application till the date of actual refund. The reason is not far to see, namely, that a party should not be prejudiced o....