2026-VIL-1447-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Interest on refund of amount paid by mistake of fact - Rate of interest payable - Appellant paid Service Tax on GTA services and claimed refund on ground that exemption was available under Notification No.25/2012-ST for food stuff - Appellant appealed contending that since amount was paid by mistake of fact it constitutes a deposit and should be refunded with interest @ 12% - Whether amount paid by mistake of fact is refundable with interest @ 12% or without interest - HELD - When amount is paid by mistake of fact, it is not treated as tax but as a deposit and therefore should be refunded along with interest. The CESTAT, Delhi Bench in cases of Gajendra Singh Sankhla, Meenu Builders and others held that interest @ 12% is payable on refund of amount paid by mistake of fact or mistake of law. Calcutta High Court in Rajendra Kumar Jain versus Commissioner of Customs (Port) Kolkata held that there is no statutory provision fixing rate of interest for refund of amount deposited during investigation and therefore interest @ 12% is payable till such statutory provision is notified - Fact that refund was sanctioned and paid within three months from date of application is not relevant consideration when amount in question is paid by mistake of fact as it is treated as deposit requiring interest. Since Commissioner (Appeals) accepted that amount was paid by mistake of fact, appellant entitled to interest @ 12% from date of deposit till date of refund payment. The impugned order rejecting interest claim not sustainable and set aside – The appeal is allowed with interest @ 12% granted
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