2026-VIL-1257-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Interest on refund of tax erroneously paid under mistaken belief – Eligibility to refund in the absence of documentary proof of duty payment - Voluntary payment of service tax on works executed in respect of construction of low cost house of carpet area less than 60 square meters and single independent house/ flats built by Rajasthan Housing Board (RHB), which is exempted by virtue of Notification No. 21/2012-ST – Commissioner (Appeals) denied interest observing that no interest is payable as the orders were passed well within three months from the date of filing of the refund claims – HELD - The narration of the appellant’s refund claim, by the Revenue, in its notice issued to the appellant cannot be considered as a stamp of assertion by the authority - The amount so claimed to be paid, is unknown; the date on which such amounts were said to be paid is unknown; the head under which the said amounts said to be paid is unknown, the purpose for such payment, if made, is also unknown. With so many unknown settings it fails rational logic to accept the claim of the appellants on its face value, when the law mandates furnishing of such “documentary and other evidence” in support of the claim - The assertion of the appellant is vague and indeterminate, completely non-verifiable and no more than a bland statement, which cannot substitute the need for hard evidence as required for allowing a refund claim under Section 11B of the CEA, 1944 - Section 11B requires documentary or other evidence establishing payment of duty; in the absence of challans or certificates from the Rajasthan Housing Board, the claimed payment was unverifiable - The appellants are not entitled to refund amounts withheld by the authorities - The appeals are disposed of by confirming rejection of refund components not supported by documentary evidence of tax payment and directing payment of statutory interest at 6% on the admissible refunds, from expiry of three months after the respective refund applications until payment – The appeals are disposed of accordingly - Interest on delayed refund - Statutory rate of interest on refund – HELD - The voluntarily paid duty cannot be treated as a revenue deposit merely because the service was subsequently asserted to be exempt. Interest commences only after expiry of three months from receipt of the refund application, and the Tribunal cannot award interest from the date of payment or at a rate beyond that notified under Section 11BB of CEA, 1944 - The appellants are liable to be paid interest by the Revenue in terms of Section 11BB. The interest would be accruable and payable to the appellants only in terms of Section 11BB of the Act for the delay in grant of refund beyond three months from the date of refund application. With utmost respect to the decisions cited by the appellant and law as settled by the Constitutional Courts, any claim of interest @12% is contrary to the extent provisions of Section 11BB of the Act and therefore contra legem the authority of this Tribunal, it not being in accordance with the prescribed statutory provisions. However, the rate of interest @ 6% in terms of Notification No.67/2003-CE(NT) dated 12.09.2003 is ex lege to which the appellant would lawfully be entitled to.
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