Sec 11BB Excise Act| Service Provider Entitled To Interest Immediately After Expiry Of 3 Months From Date Of Receipt Of Refund Application: Delhi HC
The Delhi High Court has ruled in favour of Blackberry India (petitioner), stating that the company is entitled to receive interest on the amount of refund that was sanctioned by the Adjudicating Authority under Section 11BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.
The High Court noted that the Adjudicating Authority had correctly followed the provision that interest under Section 11BB of the Excise Act would be due from the date after the three-month window of the refund application if it’s not processed within that time. However, the error occurred when the Authority considered the petitioner's letter dated Feb 07, 2023, requesting the refund claim's processing, as the actual application for refund.
The Division Bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that “There is no cavil that the petitioner would be entitled to the interest in terms of Section 11BB of the Excise Act from the date immediately after the expiry of three months from the date of receipt of an application for refund”.
The Bench therefore directed the Adjudicating Authority to promptly process the petitioner's claim for interest on the sanctioned refund.
Advocate Priyanka Rathi appeared for the Petitioner, whereas Advocate Akshay Amritanshu appeared for the Respondent.
The brief facts of the case were that the petitioner, engaged in providing services to Blackberry Singapore, contested that said services constituted export services as per the Service Tax Rules, 1994, making them eligible for a refund of unutilized Cenvat Credit. The petitioner challenged an order passed by the Adjudicating Authority, which approved the refund of unutilized Cenvat Credit but denied interest on the refunded amount. The Adjudicating Authority's decision was based on the claim that the refund had been sanctioned within the stipulated three-month period, as outlined in Section 11BB of the Excise Act read with Section 83 of the Finance Act. However, the Authority mistakenly referred to the date of application for refund, rather than the initial application dates.
After considering the submission, the Bench found the impugned order to be evidently erroneous in its denial of the petitioner's interest claim.
The Bench emphasized that it was unequivocal that the petitioner had a legitimate right to interest under Section 11BB of the Excise Act, starting from the date immediately after three months from the receipt of the refund application.
The Adjudicating Authority, however, failed to account for the petitioner's submission of refund applications for the tax periods of April-June 2012, April-June 2013, and July-September 2013, respectively, added the Bench.
Accordingly, the Bench concluded that the interest due to the petitioner should be calculated from the date immediately following the three-month period from the respective application dates.
Cause Title: Blackberry India v. The Assistant Commissioner, Central Excise and CGST Division [Neutral Citation: 2023: DHC: 5470-DB]