Denial of Interest on service tax refund specious – Bombay high court

Shroff United Chemicals Limited. versus The Union of India and others (Mumbai High Court) – The Bombay high court last week described the denial of interest on refund of service tax by the deputy commissioner as “specious” in the case, Shroff United Chemicals Ltd vs Union of India. It asked the revenue authorities to pay interest for the delayed refund. The firm, in anticipation of import of intellectual property services, had obtained service tax registration. It then approached the Reserve Bank for the remittance of funds abroad, for a proposed acquisition of the registration of certain agrochemical products in the U.S. In anticipation of the permission of the Reserve Bank for the remission of funds abroad, it deposited Rs.1.02 crore. However, it did not receive permission on time and therefore it could not acquire the registration. It filed refund claim which was allowed. But the interest on delay was denied. Then the firm moved the high court for interest. The high court allowed the claim and stated that under Section 11BB of the Central Excise Act, the firm was entitled to interest after three months of receiving the application for refund.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 3454 OF 2011