In a Writ Petition filed before the Karnataka High Court (HC) under Article 226 of the Constitution of India, entertained by Justice S.R. Krishna Kumar granted relief under Section 11BB of the Central Excise Act, 1944 to pay interest at the rate of 6% per annum for committing delay in issuing service tax refund order.
Utilizing Section 11BB of the Central Excise Act of 1944 read with Section 83 of the Finance Act of 1994, the petitioner, M/S. Altisource Business Solutions Pvt. Ltd., filed a writ petition to request for a writ of certiorari to quash the impugned order rejecting the request to grant interest of Rs. 11,33,55,127.
Additionally, the petitioner seeks the issuance of a writ of mandamus or any other suitable writ, order, or direction instructing the respondent to pay the petitioner interest.
The petitioner filed refund claims, which were sanctioned in favour of the petitioner during the period from 28.03.2018 to 19.05.2020, respectively.
The single bench observed that it is unquestionably true that the respondent did not pass the refund sanction order within the allowed time three-month period, and that the delay on the respondent’s part in failing to pass the refund sanction order cannot be attributed or attributable to the petitioner, especially considering that the adjudicatory process had to mandatorily be finished within the three-month period.
The petitioner’s counsel, Josheph Prabhakar argued that the respondent’s failing to process the petitioner’s refund claims within the three-month after receipt of the petitioner’s applications, as required by Section 11-BB of the Central Excise Act of 1944, contributed in the petitioner filing a representation requesting the respondent to pay interest on the delayed refund.
Further, It is submitted that instead of complying with the request of the petitioner, respondent issued a show-cause notice calling upon the petitioner as to why the request for grant of interest should not be rejected.
On the contrary side, the respondent claims that there are some errors and gaps in the same. Later, the respondent directed the petitioner to provide the necessary information, documentation, and submissions.
Furthermore that there was no delay on the side of the respondent in granting the refund and that, as a corollary, the respondent was not responsible for paying interest because the refund was sanctioned within the required period of three months following the date of the petitioner’s final submission.
The court made an observation regarding the respondent’s argument that the respondent completely misdirected itself in determining that the three-month period would begin from the date of the petitioner’s final submission, not from the date of submission of the refund claim, and that this is in contravention of Sections 11-B and 11-BB of the Central Excise Act, 1944. The bench set aside the impugned order passed by the respondent and ordered to pay the interest of 6% per annum after expiry of three months from the date of submission of the refund request by the petitioner as expeditiously as possible and at any rate within a period of three months from the date of receipt of a copy of this order.
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