Case Note & Summary
The petitioner, M & G Global Services Pvt. Ltd., is engaged in providing Information Technology enabled services to its group entities located outside India. In providing these output services, the petitioner receives various input services and avails credit for service tax paid under Rule 3 of the CENVAT Credit Rules, 2004. Since the petitioner's services are exported without payment of service tax, there is an accumulation of CENVAT credit of service tax paid on input services. Under Rule 5 of the Credit Rules, the petitioner is entitled to claim a refund of the unutilised credit. The petitioner filed eight refund applications, which were processed and refund was granted. However, the petitioner claimed that under Section 11BB of the Central Excise Act, 1944, if any duty ordered to be refunded is not refunded within three months from the date of receipt of the application, interest at a rate fixed by the Central Government (currently 6% per annum) is payable from the date immediately after the expiry of three months till the date of refund. The respondents did not dispute the facts but argued that interest was not processed due to certain defects in the applications, which were subsequently rectified. The court considered the submissions and held that the petitioner is entitled to interest under Section 11BB of the Central Excise Act, 1944, on the refund amounts for the period of delay. The court directed the respondents to compute and pay interest at 6% per annum within four weeks from the date of the order. The writ petition was disposed of accordingly.
Headnote
A) Indirect Taxation - CENVAT Credit Refund - Interest on Delayed Refund - Section 11BB Central Excise Act, 1944 - Rule 5 CENVAT Credit Rules, 2004 - Petitioner, an IT-enabled services provider, exported services without payment of service tax, resulting in accumulated CENVAT credit. Petitioner filed eight refund applications under Rule 5 of the CENVAT Credit Rules, 2004, which were processed and refund granted. However, refund was delayed beyond three months from the date of receipt of applications. Petitioner claimed interest under Section 11BB of the Central Excise Act, 1944, which mandates interest if refund is not made within three months. Respondents did not dispute facts but argued that defects in applications caused delay. Court held that interest is payable from the date immediately after expiry of three months from receipt of application till date of refund, at the rate of 6% per annum as fixed by Central Government. (Paras 1-10)
Issue of Consideration
Whether the petitioner is entitled to interest under Section 11BB of the Central Excise Act, 1944 on delayed refund of CENVAT credit of service tax paid on input services used for exported output services.
Final Decision
The court allowed the writ petition and directed the respondents to compute and pay interest under Section 11BB of the Central Excise Act, 1944 at the rate of 6% per annum on the refund amounts for the period of delay within four weeks from the date of the order.
Law Points
- Interest on delayed refund
- CENVAT credit refund
- Section 11BB Central Excise Act
- 1944
- Rule 5 CENVAT Credit Rules
- 2004
- Export of services
- Accumulated credit
