Microsoft wins Service Tax Interest Case: CESTAT cites Automatic Interest Provision u/s 11BB [Read Order]

In a significant relief to Microsoft, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh has allowed the company’s claim for interest under Section 11BB of the Central Excise Act, 1944 on delayed service tax refund. The Tribunal passed the final order holding that the delay in sanctioning the refund was attributable solely to the Revenue and not to the appellant.

Microsoft Corporation Private Limited, based in Gurugram, had filed eight refund claims for the period April 2010 to March 2012 on account of unutilized CENVAT credit arising from export of services under the category of “Business Auxiliary Service.” The refund was sanctioned on April 29, 2016. However, since the refund was granted after the statutory period of three months from the date of filing, the appellant filed a separate claim for interest on July 8, 2016. This claim was rejected by both the original authority and the Commissioner (Appeals), citing delays on the part of the appellant in submitting required documents.

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The appellant, represented by Prasad Paranjape and Harshvardhan Kumar, refuted the Revenue’s contention, arguing that all prescribed documents were filed and that the only delay was due to the Department issuing a deficiency memo four years after the original filing. The appellant relied on several judicial precedents including their own case decided by the same Bench on May 3, 2024, as well as judgments of the Supreme Court and various High Courts affirming the mandatory and automatic nature of interest under Section 11BB.

After considering the submissions, the Bench comprising S. S. Garg, Member (Judicial), and P. Anjani Kumar, Member (Technical), ruled in favor of the appellant. The Tribunal found no evidence from the Revenue to substantiate its claim that the delay was due to non-cooperation by the appellant. It also noted the Department’s failure to act in accordance with CBEC Circular No. 828/05/2006-CE and held that the delay was entirely on the part of the Department.

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In Conclusion, CESTAT allowed the appeal and directed that Microsoft Corporation Private Limited be paid interest on the delayed refund in terms of Section 11BB of the Act.

To Read the full text of the Order CLICK HERE

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