The Chandigarh bench of the Customs Excise and Services Tax Appellate Tribunal (CESTAT) allowed the state authorities to grant 12% interest on the delayed refund.
The fact is that the appellant, M/s Sunrise Immigration Consultants Private Limited, is engaged in providing Visa Consultancy Services to its various clients who wish to study or settle down in a foreign country.
The appellant was duly registered with the department for providing taxable services under the category of “Commercial Training and Coaching” and other taxable services.
The bench observed that a dispute was going on between the appellant and the department with respect to the taxability of referral services rendered by the appellant. The department was of the view that the services provided by the appellant to Canadian banks and foreign universities/colleges do not amount to the export of services as the provision of the services is the location of the service provider (India).
Further, the appellant in order to safeguard themselves from the charge of interest and penalty as well as to buy mental peace deposited the amount under protest totalling Rs. 25,39,804 as a response to the show cause notice. The said amount was paid under protest as the dispute was going on between the appellant and the department.
The amount paid by the appellant was under protest and to avoid the implication of huge liability of interest and penalty, when the investigation and dispute were going on for the prior period and the subsequent period claimed Varun Gaba, the counsel appeared for the appellant.
Further submitted that the impugned refund claim was sanctioned by the present tribunal accepting the facts that it was paid under protest and it was also held that the impugned refund claim was not time-barred.
Conversely, Rajeev Gupta and Amandeep Kumar the respondent counsel, unitedly submitted that the tribunal’s decision allowing the refund of the appellant does not talk about the payment made under protest.
In addition, the service tax cannot be compared to a payment made in protest because it was paid to secure them from owing interest and penalties as well as to get mental peace.
Lastly, with regard to the rate at which interest is to be paid, the counsel submitted that the interest should be granted to the appellant at the rate of 6% and not 12% under Section 11BB of the Central Excise Act, 1944.
The bench of S.S. Garg considered the decision of the Punjab and Haryana High Court in the case Commissioner of Central Excise Vs. Ms Riba Textiles Ltd. and held that the appellant is entitled to claim interest on delayed refund from the date of deposit till the date of payment at the rate of 12% per annum.
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