The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the interest on refund since the claim of service tax was filed after one week of passing the order.
M/s. Rajendra Mittal Construction Company Pvt. Ltd, the appellants have been registered for providing work contract services and construction other than residential complex services. During the audit, Department observed that work contract services have been provided by the appellant in the capacity of a sub-contractor of M/s. NBCC.
The appellant had not paid any service tax on the belief that the services were exempted vide entry at Sl. No.12A of Notification No.25/2012-ST dated 20.06.2012. On-demand, the appellant deposited part amount of his service tax liability of Rs.12,00,290/- with the interest of Rs.35,342/- vide challans dated 09.08.2015.
After that, the appellant was served with three Show Cause Notices demanding a service tax of Rs.21,72,592/- alongwith the interest and imposition of penalty. The proposals of Show Cause Notices were initially confirmed by the Original Adjudicating Authority. On appeals against the said order were allowed by Commissioner (Appeals).
Pursuant to orders, the appellant filed the refund claim dated 22.01.2021 of Rs.12,00,290/- alongwith the interest of Rs.35,342/- as was deposited vide challans dated 09.08.2015 alongwith the refund of RS.18,39,238/-, the amount of pre-deposit paid on 18.10.2009. The Department observed that out of the aforesaid amount of refund the amount of Rs.12,00,290/- with interest of Rs.35,342/- was deposited after being pointed out by the Audit. Also, the claim is barred by time and rejected the refund claim to that extent.
Shri Ajay K. Mishra, Counsel for the appellant and Shri V.J. Saharan, Authorised Representative for the Revenue.
the appellant has mentioned that the amount of Rs.12,00,290/- is an amount which was paid during the investigation when the audit tem impressed upon for the discharge of the liability. The said amount was paid as a partial discharge of the liability. It is impressed upon that the amount paid pending investigation has been held to be an amount as paid under protest and it is nothing but a revenue deposit. Hence, Section 11B which is about the refund of duty will not be applicable to the aforesaid amount.
A single-member bench comprising Dr Rachna Gupta, Member (Judicial) observed that the ground of rejecting the amount is that the same cannot be an amount covered under section 35F of Central Excise Act. Hence, section 11 B of the Act shall be applicable for a refund of the amount.
The department is held liable to refund the said amount also alongwith the interest. In light of decisions in the case of Parle Agro Pvt. Ltd and Dugger Fibers Pvt Ltd the Department is directed to grant interest on the said amount at the rate of 12% from the date of deposit till the date of payment.
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