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.
M/s. Indore Treasure Market City Pvt Ltd, the appellants are engaged in the business of setting up and managing shipping centres, family entertainment centres, multiplexes, popularly known as ‘Malls’ etc. The Department initially observed that the appellants have wrongly availed the Cenvat Credit of service tax paid amounting to Rs.10,21,04,601/-.
The appellant filed the refund claim for an amount of Rs.7,15,09,643/- on 04.01.2022. The said refund was sanctioned however was without any interest on the said amount. Resultantly, the order under challenge was assailed before the Commissioner ( Appeals ). However, the Commissioner ( Appeals ) has opted not to interfere in the order passed by the Original Adjudicating Authority and rejected the appeal vide the order under challenge.
Shri Bharat Raichandani, Counsel for the appellant and Ms Jaya Kumari, Authorised Representative for the department. Counsel for the appellant has relied upon a catena of decisions as below to impress upon that the issue of grant of interest on the amount sanctioned as a refund to the appellant of the amount deposited during the investigation is no more res integra.
Counsel has brought to the notice that there is no denying that the impugned claim was filed within the permissible time limit and that the clause of unjust enrichment does not apply to the impugned amount. In addition to these submissions, counsel has prayed that the interest at the rate of 12% may be sanctioned on the amount refunded to be awarded from the date of deposit.
The Adjudicating Authority while denying the entitlement for interest invoked section 11B/11BB of the Central Excise Act. From the bare reading of the above section, it is clear that the provision refers to the claim of refund of duty of excise only, it does not refer to any other amount collected without the authority of law.
The Tribunal found that there was a lack of authority to collect such service tax by the appellant. It would not give the Department an authority to retain the amount paid which otherwise was not payable by the appellant. Nothing may act as an embark on the right of the appellant to demand a refund of payment made by them under the mistaken notion.
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.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
