Qualcomm India Private Limited Vs Union of India And Others (Bombay High Court)
Conclusion: Once there was delay in payment of refund within three months from the date of receipt of application, rigors of section 11BB set in and payment of interest on the delayed refund became obligatory. Non-granting of interest in such a case would amount to failure to discharge statutory duty / obligation by the refund sanctioning authority, therefore, assessee would be entitled to interest under section 11BB of the Central Excise Act, 1944 on the amounts refunded to it.
Held: Assessee-company was engaged in the business of providing support services primarily to its foreign affiliates within the meaning of Chapter V of the Finance Act, 1994. In order to provide such services, assessee received various input services and availed credit for service tax paid thereon under rule 3 of the CENVAT Credit Rules, 2004. It was stated that services provided by assessee qualified as export of service under the erstwhile Export of Service Rules, 2006 as well as under rule 6A of the Service Tax Rules, 1994 read with rule 3 of the Place of Provision of Services Rules, 2012. Assessee received the refund amounts as sanctioned. However, the refund amounts were sanctioned beyond three months from the date of filing of refund applications. Therefore, assessee claimed that it was entitled to interest on delayed payment of refund under section 11BB of the Central Excise Act, 1944 made applicable to service tax vide section 83 of the Finance Act, 1994. In such circumstances, assessee-company submitted a letter requesting respondent authority to grant 6% p.a. interest on delayed refund for the period after expiry of three months from the date of application till the date of actual refund. It was held that in fact respondents had not disputed that the refund orders were passed beyond the period of three months from the date of receipt of the refund applications. Only defense put up was that there was no intentional delay by the respondent. Section 11BB did not speak about or exempt any delay which was not intentional. The section did not distinguish delay which was intentional and delay which was unintentional. Once there was delay in payment of refund within three months from the date of receipt of application, rigour of section 11BB set in and payment of interest on the delayed refund became obligatory. Non-granting of interest in such a case would amount to failure to discharge statutory duty / obligation by the refund sanctioning authority for which the aggrieved claimant could seek a writ of mandamus from the Writ Court under Article 226 of the Constitution of India. Assessee would be entitled to interest under section 11BB of the Central Excise Act, 1944 on the amounts refunded to it.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
By filing this petition under Article 226 of the Constitution of India, petitioner seeks a direction to the respondents to forthwith grant and sanction interest on the refund amount after expiry of three months from the respective dates of application till the date of actual refund under section 11BB of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994.
2. We have heard Mr. Prakash Shah, learned counsel for the petitioner and Mr. Sham Walve along with Mr. Ram Ochani, learned counsel for the respondents.
3. Petitioner is a company incorporated under the Companies Act, 1956 having its registered office at Bandra Kurla Complex, Mumbai. Petitioner is engaged in the business of providing support services primarily to its foreign affiliates within the meaning of Chapter V of the Finance Act, 1994.
4. In order to provide such services, petitioner receives various input services and avails credit for service tax paid thereon under rule 3 of the CENVAT Credit Rules, 2004 (“CENVAT Credit Rules” hereinafter). It is stated that services provided by the petitioner qualified as export of service under the erstwhile Export of Service Rules, 2006 as well as under rule 6A of the Service Tax Rules, 1994 read with rule 3 of the Place of Provision of Services Rules, 2012.
5. Hence, petitioner did not pay any service tax on the output services so exported. This resulted into accumulation of CENVAT credit of service tax paid on input services. In terms of rule 5 of the CENVAT Credit Rules, petitioner as provider of output services that are exported is entitled to claim refund of the credit of the service tax paid on the input services that remained unutilized.
6. Accordingly for the period from June, 2008 to December, 2014, petitioner filed 19 refund applications claiming refund of untilized CENVAT credit under rule 5 of the CENVAT Credit Rules along with supporting documents. Details of the applications have been furnished in the form of a statement by the petitioner in paragraph 10 of the writ petition which for the sake of convenience is extracted hereunder:-
