CASE DIGEST: Cestats Rulings on Interest waiver

Rejection of Interest Waiver for Power Project Found Unreasoned: CESTAT Remits Matter for Fresh Consideration

Essar Power Gujarat Ltd vs Commissioner of C.E. & S.T. CITATION:2025 TAXSCAN (CESTAT) 417

The Customs,Excise and Service Tax Appellate Tribunal(CESTAT) Ahmedabad  Bench  found the rejection of interest waiver for a power project unreasoned and arbitrary due to the Chief Commissioner‘s failure to provide any explanation or hearing, and remitted the matter back for fresh consideration.

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As a result, the bench set aside all related orders, including the one dated 16th November 2017 issued by the Commissionerate of Central GST and Central Excise, Rajkot. The matter was remitted back to the Chief Commissioner with instructions to pass a reasoned order after hearing the assessee.

CESTAT not empowered to allow Interest on Interest for delayed payment of Customs refunds in absence of statutory provision: CESTAT

Bochasanwasi Shri Aksharpurushottam Swaminarayan Sansth vs C.C.-Ahmedabad CITATION:2021 TAXSCAN (CESTAT) 118

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench ruled that the CESTAT is not empowered to allow Interest on Interest for delayed payment of Customs refunds in absence of statutory provision.

As regards the judgment cited by the appellant for higher interest, we find that all those cases have been decided either by the Hon’ble Supreme Court or Hon’ble High Court which had inherent powers can fix any rate of interest but this tribunal has no power to decide any rate of interest different than prescribed under the statute. Therefore, Learned Commissioner (Appeals) has rightly held that the Adjudicating Authority has rightly applied a simple rate of interest as 6% P.a. Therefore, the assessee cannot be granted interest at the rate of 15% or any other rate above 6%,” the CESTAT ruled.

Acceptance of Excess Service Tax Pre-Deposit: CESTAT Directs Revenue to Refund Accrued Interest to Yamaha

M/s India Yamaha Motor Pvt. Ltd vs Commissioner of Central Goods & Services Tax CITATION:   2024 TAXSCAN (CESTAT) 707

The Allahabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) in a recent matter upheld the right of an Appellant to receive accrued Interest on Pre-Deposit amount deposited with the Appellate Authority to permit filing of Appeal, notwithstanding the Appellate Authority’s breach of accepting a pre-deposit amount higher than the statutorily permissible limit under Section 35F of the Central Excise Act, 1944.

Concludingly, the Judicial Member pronounced that accepting a pre-deposit in excess of the statutory limit of Ten Crore Rupees is a violation committed by the Adjudicating Authority; such acceptance does not absolve them of the liability to pay interest on the pre-deposit subsequent to disposal of the Appeal under Section 35FF of the Central Excise Act, 1944.

Refund of Deposit during Investigation: CESTAT allows Interest @12% from the Date of Deposit

M/s. Green Valley Industries Limited vs Commissioner of CGST & CX, Shillong Commissionerate CITATION:2022 TAXSCAN (CESTAT) 233

The CESTAT, Kolkata bench, on Monday, allowed interest at 12% from the date of deposit in cases where amount was deposited during the investigation.

While concluding, the Tribunal held that “thus in light of the view taken by this Tribunal in Parle Agro (supra), it is my considered view that the Appellant is entitled to interest @ 12% from the date of deposit till the date of receipt of such refund. The order of the First Appellate Authority is modified to the above extent. The lower authorities are directed to compute the eligible interest as above and pay the same within four weeks from the date of communication of this order.”

CESTAT directs Adjudicating Authority to grant 12% interest on delayed refund

J. K. Cement Works vs Commissioner, Central Excise, Central Goods and Service Tax CITATION:2021 TAXSCAN (CESTAT) 311

The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT), New Delhi Bench directed the Adjudicating Authority to grant 12% interest on delayed refund.

The coram of a Judicial Member, Anil Choudhary held that the Adjudicating Authority is directed to grant interest from the date of deposit till the date of grant of a refund at the rate of 12% per annum. Such interest on refund should be granted within a period of 60 days from the date of receipt of, or service of a copy of the order.

Delayed Refund of Excise Duty paid during Investigation eligible for Interest: CESTAT

Shri Nakoda Ispat Ltd. vs Commissioner of Customs CITATION: 2022 TAXSCAN (CESTAT) 456

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the delayed refund of excise duty paid during the period of investigation is eligible for interest under section 35FF of the Central Excise Act, 1941.

“Further, following the ruling of the Apex Court in the case Sandvik Asia Ltd. (supra), it has been held that interest shall be payable @ 12% p.a. Further, Single Member Bench of this Tribunal in the case of Riba Textiles Ltd vs. CCE & S.T., 2020(2) TMI 602-Chandigarh have also granted interest @ 12% p.a. under Section 35FF. This order had been appealed against by Revenue before Hon’ble Punjab & Haryana High Court in CEA No. 8/2022, by its judgment dated 14/03/2022, High Court has upheld the grant of interest @ 12% p.a., relying upon the ruling of the Apex Court in the case of Sandvik Asia Ltd,” the Tribunal said.

CESTAT Orders Dept to pay 12% Interest on Deposit collected during Investigation

Gautam Industries vs Commissioner of C.E. & S.T., Faridabad CITATION: 2022 TAXSCAN (CESTAT) 192

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh bench, while allowing an appeal filed by Gautam Industries, directed the excise department to pay 12% interest on the amount of deposit collected during the investigation period.

“Therefore, following the latest decision of this Tribunal in the case of M/s Jovex International (supra), I hold that the appellants are entitled for interest @12% p.a. from the date of deposit till the date of realization of refund of the amount paid during investigation,” the Tribunal said.

CESTAT allows 12% Interest on Delay in processing Refund of Pre-Deposit

M/s Leather Sellers vs Commissioner of Customs And Excise, Patparganj CITATION: 2022 TAXSCAN (CESTAT) 391

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi bench has allowed 12% Interest on delay in processing refund of pre-deposit.

The Coram of Mr. Anil Choudhary, Member (Judicial) by relying on the decision of Tribunal in Parle Agro Ltd. has held that “I hold that the amount was lying in the nature of the pre-deposit with the department from the date of encashment of the Bank Guarantee. Accordingly, I hold that the appellant is entitled to interest from the date of encashment of Bank Guarantee, i.e., 21/07/2006 to 22/07/2019 under Section 129EE of the Customs Act @ of 12% P.A”.

Appellant Entitled to Interest on GST Refund for Amount Deposited during Investigation u/s 35EE of Central Excise Act: CESTAT allows Appeal

M/s Kurele Fragrances Pvt. Ltd vs Commissioner of CGST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 640

The Allahabad Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), has allowed the appeal granting interest on the refundable amount of Rs. 50,00,000 to the appellant from the date of deposit till the date of refund at a rate of 12% per annum.

The Tribunal allowed the appeal and held that the appellant is entitled to interest on the refundable amount of Rs. 50,00,000 from the date of deposit (03.06.2006) till the date of refund (02.01.2020), at 12% per annum.

Taxpayer is liable to pay Interest on Service Tax Paid in Delayed Manner: CESTAT Upholds Rejection of Refund Claim

M/s Quality Waves Benchmark LLP vs The Commissioner of Central Tax,Hyderabad- GST CITATION:   2024 TAXSCAN (CESTAT) 556

The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the rejection of the refund claim, affirming that the taxpayer is liable to pay interest on service tax that was paid in a delayed manner.

Therefore, the single member bench of the tribunal comprising P. Anjani Kumar ( Technical member)  found that the admissibility of credit in such situation is subject to provision of Rule 9(1) (bb) and therefore, no argument at length, on the issue of provisions of Section 142(7) of CGST Act, 2017, are applicable to the appellant.CESTAT found  that authorized representative for the revenue has placed a number of judgments passed by this very Bench holding that the appellants were not eligible for refund of such credit.

Immigration Consultant Claims Refund of Service Tax Paid under Protest: CESTAT Allows 12% Interest on Delayed Refund

M/s Sunrise Immigration Consultants Private Limited vs CG & ST-Chandigarh CITATION: 2023 TAXSCAN (CESTAT) 403

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 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.

CESTAT Grants Interest on Pre-Deposit Refund Under Pre-Amended Provisions of Excise Act

M/s Amkap Marketing Pvt. Ltd vs Commissioner of Central Excise & CGST CITATION: 2025 TAXSCAN (CESTAT) 368

The Allahabad Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT) granted interest on a pre-deposit refund under the pre-amended provisions of the Central Excise Act, 1944.

In Goldy Engineering Works (2023), the Delhi High Court clarified that interest on delayed refunds starts from the application date, while in Shreejikrupa Spinners Pvt. Ltd. (2016), the Gujarat High Court ruled that interim deposits were not considered “duty” and no interest was due. A single member bench comprising Sanjiv Srivastava(Technical Member) stated that the importance of following statutory provisions and past rulings in determining interest on refunds.

Taxpayer made pre-deposit of whole Demand of Service Tax: CESTAT upholds 7.5 % Interest on Deposited Demand

M/s Brahmaputra Cracker an Polymer Limited vs Commissioner of CGST & Excise CITATION: 2024 TAXSCAN (CESTAT) 582

The Kolkata bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) upheld the imposition of a 7.5% interest on the deposited demand, even though the taxpayer made a pre-deposit of the entire service tax demand.

The two member bench of the tribunal comprising Ashok Jindal ( Judicial member) and K.Anpazhakan ( Technical member) observed that appellant was  entitled to claim the interest on 7.5% of the demand of service tax deposited (Rs.7,90,08,905/-) on 28.12.2018 till its realization i.e. 01.09.2022.  In terms of the decision of the Tribunal in the case of Parle Agro Private Limited (supra), the appellant was entitled for interest at the rate of 12% per annum.  In conclusion, CESTAT held that the appellant was entitled to interest on 7.5% of Rs.7, 90, 08,905/- from 28.12.2018 till 01.09.2022 at the rate of 12% per annum, accordingly, the appeal was disposed of.

Delayed refund of Service Tax: CESTAT directs to pay interest @ 12%

Indore Treasure Market City Pvt Ltd vs COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE, INDORE CITATION:  2024 TAXSCAN (CESTAT) 281

The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) directed to pay interest @ 12 % on the delayed refund of Service Tax. The Tribunal observed that the appellant is entitled to the interest on the amount of refund sanctioned at the rate of 12% to be calculated from the date of payment till the date of disbursement.

A two-member bench comprising Dr Rachna Gupta, Member( Judicial ) and Ms Hemambika R Priya, Member( Technical ) held that the appellant is entitled to the interest on the amount of refund sanctioned at the rate of  12%  to be calculated from the date of payment till the date of disbursement.

Enhanced payment of 12% Interest on Pre-deposit to be payable from date of deposit till the date of Excise Refund: CESTAT

Jovex International vs Commissioner, Central Tax CITATION:  2021 TAXSCAN (CESTAT) 114

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that enhanced payment of 12% Interest on pre-deposit to be payable from date of deposit till the date of Excise Refund.

“I further take notice that a Division Bench of this Tribunal in Parle Agro (P) Ltd., vs. Commissioner, CGST-2021-TIOL-306-CESTAT-ALL, wherein interest on pre- deposit (made during investigation), have been enhanced from 6% to 12%, following the ruling of the Apex Court in Sandvik Asia Ltd., – 2006 (196) ELT 257 (SC). Thus, I direct the Adjudicating Authority to grant interest @ 12% per annum from the date of deposit till the date of refund. Such interest should be granted within a period of 45 days from the date of receipt or service of the copy of this order,” the CESTAT observed.

Interest on delayed Refund payable u/s 11BB of Central Excise Act when the Double benefit of the Same amount not exists: CESTAT

Bright Engineering Works Erstwhile 100 Eou vs C.C.E. & S.T CITATION: 2022 TAXSCAN (CESTAT) 711

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that interest on delayed refund payable u/s 11BB of Central Excise Act when the double benefit of the same amount not exists.

While allowing the appeal, the Court held that the Commissioner (Appeals) has erred in rejecting the appellant’s claim for refund and the impugned orders were set aside.

2% Penal interest charged over applicable interest rate not Subject to Service Tax u/s 66E (e) of Finance Act, 1994: CESTAT

Commissioner of Central Excise And Appellant Service Tax vs s Power Finance Corporation Ltd CITATION: 2024 TAXSCAN (CESTAT) 950

In a recent ruling, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that the 2% penal interest charged over the applicable interest rate was not subject to service tax under Section 66 E(e) of the Finance Act, 1994.

The CESTAT bench, by referring to various judgments, held that no service tax can be levied on the liquidated damages/penal interest charged by the respondent. This is because the liquidated damages/penal interest charged by the appellant at 2% cannot be construed as additional consideration as it is a penal interest on account of delayed payment of loans.

Assesse is entitled for an Interest of 12% on Pre-Deposit Amount u/s 35F: CESTAT

M/s. Elegant Developers vs The Commissioner, Central Excise &CGST, Delhi-South CITATION: 2022 TAXSCAN (CESTAT) 111

The New Delhi Principal Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that the assessee is entitled for an interest of 12% on pre deposit amount under Section 35F of the Central Excise Act.

The single bench presided by Rachna Gupta, Member (Judicial) has held that “I am of the opinion that the reasonable rate of interest in the given facts and circumstances is the rate at twelve percent. Hence, the request of the appellant is accepted with respect to rate of interest also. Consequent to the above discussion, the order under challenge/Order-in-Appeal is hereby set aside holding appellant to be entitled for sanction of refund of pre-deposit amount along with interest at the rate of twelve per cent thereof. The appeal accordingly stands allowed”.

Interest on Delayed Refund must be Payable from Date of Deposit till Date of Payment: CESTAT allows 12% Interest

Impressive Management Solutions Pvt. Ltd vs C.G. & S.T CITATION: 2023 TAXSCAN (CESTAT) 500

In a recent case, the Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)has held that the interest on delayed refund must be payable from the date of deposit till the date of payment and allowed the 12% interest on refund.

A single member comprising Mr S. S. Garg, member (judicial) 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.” The Court set aside the impugned order and allowed the appeal. 

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