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ST – Concluding that no interest is payable since the refund was paid within three months from the date of final order of the CESTAT is an incorrect reading of s.11BB of CEA, 1944: CESTAT

2019-TIOL-2378-CESTAT-HYD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, HYDERABAD
SINGLE MEMBER BENCH
COURT NO. I

Appeal No. ST/30887/2018

Arising out of Order-in-Appeal No.VIZ-EXCUS-001-APP-023-18-19, Dated: 27.04.2018
Passed by CCCE & ST (Appeals), Visakhapatnam

Date of Hearing: 05.04.2019
Date of Decision: 05.04.2019

M/s HOTEL HAMPI INTERNATIONAL PVT LTD
16-146, 3RD LANE, MALLIKARJUNA COLONY
RAJAM-532127, SRIKAKULAM DISTRICT (AP)

Vs

COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX
VISAKHAPATNAM-I, COMMISSIONERATE 2ND FLOOR
CENTRAL EXCISE BUILDING, PORT AREA
VISAKHAPATNAM-530035

Appellant Rep by: Shri N V Ramana Rao, Adv.
Respondent Rep by: 
Shri N Bhanu Kiran, AR

CORAM: P Venkata Subba Rao, Member (T)

ST – Assessee had filed refund claim which was rejected by lower authority as well as first appellate authority but on appeal was sanctioned by this bench vide Final Order dated 22.03.2017 – Thereafter, they were paid the refund in pursuance of this order but were not paid interest under Sec.11BB of CEA, 1944 as made applicable to service tax by Sec.3 of FA, 1994 – Issue is no longer res integra and has been decided by Supreme Court in case of Ranbaxy Laboratories Ltd in which the Apex Court had held that interest has to be paid under Sec.11BB in case of delay in payment of refund – This judgment was followed in a number of cases by Tribunal including by this bench – A plain reading of Sec.11BB also shows that interest has to be paid if refund is not made within three months from the date of application – It does not say within three months from the date of sanction of refund under Sub-Section (2) of Sec.11B as held by first appellate authority – Assessee is entitled to interest from three months after the date of application till the date they were paid interest: CESTAT

Appeal allowed

Case law cited:

Ranbaxy Laboratories Ltd (in Civil Appeal No. 637/2009 & 3088/2010)…Para 3

FINAL ORDER NO. A/30455/2019

Per: P Venkata Subba Rao:

1. This appeal is filed against Order-in-Appeal No. VIZ-EXCUS-001-APP- 023-18-19 dated 27.04.2018.

2. The facts of the case are that the appellant had filed refund claim on 31.07.2014 which was rejected by the lower authority as well as the first appellate authority but on appeal was sanctioned by this bench vide Final Order No. A/30425-30428/2017 dated 22.03.2017. Thereafter they were paid the refund in pursuance of this order on 05.05.2017 but were not paid interest under Sec.11BB of the Central Excise Act as made applicable to service tax by Sec.3 of the Finance Act, 1994. The appellant’s appeal to the first appellate authority seeking interest was denied vide impugned order on the ground that the refund was paid within three months from the date of final order of the CESTAT and hence no interest is payable.

3. I find this issue is no longer res integra and has been decided by the Hon’ble Supreme Court in the case of Ranbaxy Laboratories Ltd (in Civil Appeal No. 637/2009 & 3088/2010) in which the Hon’ble Apex Court had held that interest has to be paid under Sec.11BB in case of delay in payment of refund. This judgment was followed in a number of cases by the Tribunal including by this bench. A plain reading of Sec.11BB also shows that interest has to be paid if the refund is not made within three months from the date of application. It does not say within three months from the date of sanction of refund under Sub-Section (2) of Sec.11B as held by the first appellate authority. In conclusion, the appellant is entitled to interest from three months after the date of application till the date they were paid interest.

4. Accordingly, the impugned order is set aside and the appeal is allowed.

(Dictated and pronounced in open court)

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