Munna Construction Pvt. Ltd. Vs Commissioner of CGST &Central Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, disposed of two appeals through a common order as both involved the same legal issue. In the first appeal, the appellant had paid excess Service Tax during the period 2006-07 to 2011-12. The refund claim was eventually sanctioned along with interest at 6% per annum. In the second appeal, the appellant had deposited an amount during the course of investigation, which was later found to be not payable. That amount was also refunded with interest at 6% per annum.
The appellant challenged only the rate of interest, contending that it was entitled to interest at 12% per annum. It argued that the amounts refunded did not fall within the scope of Section 11B of the Central Excise Act, 1944, and consequently, the provisions of Section 11BB governing interest on delayed refunds were also inapplicable. The Revenue, however, submitted that the deposits had been made during investigation and that the authorities had correctly granted interest at 6% under Section 11BB.
After considering the submissions, the Tribunal noted that it was an admitted fact that the appellant had either paid excess tax or deposited amounts during investigation which did not assume the character of Service Tax. The Tribunal relied extensively on its earlier decision in Meenu Builders, which had examined refunds arising from payment of Service Tax by mistake of law. That decision, in turn, had relied upon earlier judicial precedents, including the Karnataka High Court’s ruling in KVR Construction, holding that Section 11B does not apply where amounts are paid by mistake of law and were never legally payable as Service Tax.
