In a recent ruling, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that interest on refund is allowable when authority fails to refund on service tax sanctioned within three months from the date of filing of the application.
Bombardier Transportation India Pvt Ltd, the appellant submitted that the Commissioner (Appeals) has taken the date of refund application as a letter dated 22.02.2022 submitted for the refund of service tax and applicable interest whereas, the refund application was filed on 13.06.2011 which was rejected.
The Tribunal sanctioned the refund. It is settled law that the interest shall be payable after three months from the date of filing of the refund application. Commissioner (Appeals) rejected the claim of interest on theground that the appellant claimed the refund after the tribunal’s order vide letter dated 22.02.2022 therefore, the refund was sanctioned within three months from that date.The Commissioner (Appeals) gravely erred in misinterpreting the overall provision and clarification of the board circular.
It was evident that as per Section 11BB of the Central Excise Act, 1944 the claimant shall be entitled to the interest after the expiry of three months from the date of refund application. The refund application was admittedly filed on 13.06.2011.
A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) held that “if the refund is not sanctioned within three months from the date of filing, the appellant is entitled to the interest on the refund sanctioned.”
While allowing the appeal, the Tribunal held that the appellant is legally entitled to the interest on refund and the impugned order was set aside. Shri Mrugesh Pandya, Advocate appeared for the Appellant and Shri Tara Prakash, Assistant Commissioner appeared for the Respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
