Interest on delayed refund – Interest cannot be denied on ground that refund had been transferred to consumer welfare fund: High Court
By TIOL News Service
AHMEDABAD, APR 13, 2016: THE petitioner Company paid excess service tax to the tune of Rs.42,68,686/- for the advertising services provided by them during April 2003 to November 2004. On 24.01.2005, the petitioner Company filed a refund claim of Rs.42,68,686/- with the Assistant Commissioner of Service Tax. The original authority denied the refund, but the Commissioner (Appeals) held that the refund claim to the extent of Rs.28,94,776/- is admissible, but because the claim was hit by unjust enrichment, he directed that the amount of refund of Rs.28,94,776/- be transferred to the Consumer Welfare Fund. The petitioner carried the matter in further appeal before the Tribunal and the Tribunal held that the assessee is eligible for refund of Rs 28,94,776/-
Pursuant to the above order of the Tribunal, the Assistant Commissioner made a fresh order sanctioning refund of Rs.28,94,776/-, but did not allow interest on delayed refund. On appeal, the Commissioner (Appeal) allowed interest for the period from 24.04.2005 to 02.06.2008. However, for the period after 03.06.2008, the Commissioner (Appeals) held that the refund claim was sanctioned, but the amount was transferred to the Fund because of unjust enrichment and such order of Commissioner (Appeals) to refund the amount but crediting it to the Fund was an order of refund under section 11B(2) of the Central Excise Act and hence, no interest was payable for the period after 02.06.2008. The Tribunal also upheld the order of Commissioner (Appeals). Hence, the Petitioner is before the High Court.
After hearing both sides, the High Court held:
+ Under section 11BB of the Central Excise Act, there is an obligation upon the respondents to pay the interest at the prescribed rate immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty, which in the present case is from 24.04.2005 to 10.03.2010. The case of the respondent is that with effect from 03.06.2008, the amount had been transferred to the Consumer Welfare Fund and therefore, the liability of the revenue to pay any interest was discharged. In the opinion of this court, such contention cannot be countenanced for the reason that the section 11BB of the Central Excise Act provides for payment of interest after a period of three months from the date of application till the date of actual payment. The statute does not provide for curtailment of the period for which the interest has to be paid on account of any supervening circumstances, like transfer of the amount to the Consumer Welfare Fund. The Revenue could not point out any provision of law which shows that when the amount is transferred to the Consumer Welfare Fund, the period for which the assessee would be entitled to interest under section 11BB of the Central Excise Act would stand curtailed. It is a settled legal position that insofar as the taxing provision is concerned, the same has to be construed strictly and one has to look merely at what is said in the relevant provisions; there is nothing to be read in; nothing to be implied and there is no room for any intendment. On a plain reading of section 11BB of the Central Excise Act, it is evident that the object behind such provision is to provide for payment of interest to a party commencing from a period after three months from the date of application till the date of actual refund. The reason is not far to see, namely, that a party should not be prejudiced on account of any delay in deciding the application or on the ground that the party might have to challenge the order of refund before any other forum. On a plain reading of the statute, the petitioner is entitled to interest from the date specified in the statute. The Tribunal was, therefore, not justified in holding that from the date of transferring the sum to the Consumer Welfare Fund, the petitioner was not entitled to payment of interest on the refund amount. The petitioner would, therefore, be entitled to interest on the amount of Rs.28,94,776/- from 24.04.2005 till the actual payment i.e. up to 10.03.2010.
(See 2016-TIOL-742-HC-AHM-CX)
