M/S Al Tisource Business Solutions PVT LTD vs. The Deputy Commissioner

Facts

The petitioner, M/s. Al Tisource Business Solutions Pvt. Ltd., filed refund claims between June 30, 2010, and September 20, 2017. These claims were sanctioned between March 28, 2018, and May 19, 2020. The petitioner contended that the respondent, the Deputy Commissioner of Central Tax, unduly delayed processing these claims beyond the prescribed three-month period under Section 11BB of the Central Excise Act, 1944, and thus sought interest of Rs. 11,33,55,127/-. The respondent rejected this request via an order dated March 11, 2021/March 18, 2021. The respondent argued that delays were due to discrepancies in the petitioner's applications, and refunds were sanctioned within three months of the petitioner's final submissions, negating liability for interest.

Held

The Court held that the question of payment of interest on delayed refunds sanctioned beyond the prescribed three-month period is no longer res integra, citing numerous judgments from the Apex Court and various High Courts. The Court emphasized that there is no distinction between intentional or unintentional delay by the respondent. The three-month period prescribed in Section 11BB of the Central Excise Act, 1944, is mandatory. Failure to pass a refund order within this period automatically amounts to a failure to discharge statutory duty, entitling the petitioner to interest. The Court found that the respondent erred in calculating the three-month period from the date of final submission rather than the initial submission of the refund claim. The Court noted that deficiencies in the application do not absolve the respondent of liability if the adjudicatory process extends beyond three months. The impugned order was set aside, and the respondent was directed to pay interest at 6% per annum on the refunded amounts, calculated from the expiry of three months from the date of the petitioner's refund request.

Key Issues

1. Whether the petitioner is entitled to interest on delayed refund claims under Section 11BB of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994, when the refund was sanctioned beyond the prescribed three-month period from the date of application. Petitioner's Arguments: The petitioner argued that the respondent's delay in processing refund claims beyond the statutory three-month period mandates the payment of interest as per Section 11BB of the Central Excise Act, 1944. They relied on various Supreme Court and High Court judgments, including Haldor Topsoe India Pvt. Ltd. vs. AC, GST(EAST), Commissioner of Customs Mangalore vs. Gimpex Ltd., Qualcomm India Pvt. Ltd. vs. Union of India, Union of India vs. Hamdard (Waqf) Laboratories, Dee Kay Exports vs. Union of India, Manisha Pharmo Plast Pvt. Ltd. vs. Union of India, and Ranbaxy Laboratories Ltd. vs. UOI. They contended that any delay, intentional or unintentional, on the part of the respondent leads to an automatic entitlement to interest. Respondent's Arguments: The respondent contended that the refund applications contained discrepancies, necessitating requests for additional details and documents from the petitioner. They argued that the refunds were sanctioned within three months of the petitioner's final submissions, and therefore, no delay attributable to the respondent occurred, absolving them of the liability to pay interest. They sought dismissal of the petition.