CESTAT Mumbai: In a service tax appeal filed against the order passed by the Commissioner of Central Tax (Appeals) Raigad (‘The Commissioner’), which rejected the appeal filed by the appellant which had stated that the appellant shall not be eligible for interest on delay in sanction of refund, filed under Rule 5 of Cenvat Credit Rules, 2004, the bench of Ajay Sharma (Judicial Member), while allowing the appeal filed by the appellant held that refund under Rule 5 also being a refund under section 11B would squarely fall within the ambit of Section 11BB and interest is payable in case of delay in sanctioning the refund under Rule 5.
Facts
The appellant being engaged in business support service to customers located outside India, the said services qualifies as ‘export’ under the Service Tax Rules, 1994. The appellant however, exported the service without the payment of Service Tax.
In terms of Rule 5 read with notification 27/2012-CE(NT) dated 18-06-2012, the appellant claimed refund of Cenvat Credit accumulated on account of the export of services between 2013 to 2015. The refund was allowed by the Tribunal and an application was made to the Adjudicating Authority requesting for refund which was accordingly sanctioned by the said authority. However, it failed to pay any interest on the delayed sanction of refund under section 11-BB of Central Excise Act, 1944 despite the refunds being sanctioned beyond the period of three months from the date of filing of refund application.
The appellant being aggrieved by the same, filed an appeal before the Commissioner who had rejected the appeal by observing that the refund involved herein is not in the nature of any duty/tax paid by the appellant which was found refundable under section 11B.
Issue
Whether the appellant is eligible for interest on the delayed sanction of refund claim filed by them under Rule 5 of Cenvat Credit Rules, 2004?
Analysis of the Tribunal
Relying on the decision of the Supreme Court in the matter of Ranbaxy Laboratories Ltd. v Union of India, (2011) 10 SCC 292 which laid down that the interest on delayed refund is payable under section 11BB on the expiry of period of three months from the date of application, the Tribunal held that the Commissioner had lost sight of the position of law while passing order that the refund under Rule 5 also being a refund under section 11B would squarely fall within the ambit of Section 11BB and interest is payable in case of delay in sanctioning the refund under Rule 5.
The Tribunal observed that the Commissioner does not seem to be aware of the Principle of Judicial Discipline and Article 141 of the Constitution of India which provides that the decisions of the Hon’ble Supreme Court are binding on all the Courts in India and “all Courts” includes quasi-judicial authorities also, therefore he ought to have followed the law laid by the Hon’ble Supreme Court in Ranbaxy Laboratories Ltd. (supra).
Thus, the Tribunal accordingly allowed the appeal filed by the appellant.
[Capital India Pvt. Ltd. v. Commissioner of Central Tax, Navi Mumbai, 2022 SCC OnLine CESTAT 788, decided on 12-12-2022]
Advocates who appeared in this case:
For the Appellant- Advocate Sanjeev Nair;
For the Respondent- Superintendent (AR) S.B.P. Sinha.