Refunds :

In the event the assessee has to claim a refund of service tax, he has to comply with section 11B of the Central Excise Act, 1944 which is made applicable to service tax vide section 83 of the Act.

(1) Doctrine of unjust enrichment applicable: In order to claim refund under section 11B of the Central Excise Act, 1944, the assessee has to prove that the incidence of duty has not been passed on to the buyer or to any other person. This restriction is known as “unjust enrichment‟. In case, this doctrine is attracted, amount will not be refunded to the applicant, but would be credited to the Consumer Welfare Fund. The same principle is applicable to service tax also.

(2) Time-limit for filing the refund claim: Section 11B(1) of the Central Excise Act, 1944 provides that an application for refund of duty should be made to the Assistant/Deputy Commissioner before the expiry of one year from the relevant date.

“Relevant date” is the date of payment of service tax. Thus, the limitation period of one year is to be reckoned from the date of payment of duty/service tax.

Conditions to be fulfilled for filing a refund claim:- Conditions to be fulfilled for filing a refund claim may be summarized as follows: (i) It should be in the prescribed form. (ii) It should be filed before the expiry of the limitation period of one year from the date of payment of tax. (iii) Proof should be adduced that the incidence of tax has not been passed on to any person i.e. tax has been borne by the applicant.

(3) Interest on delayed refund: The provisions of section 11BB of the Central Excise Act are applicable for the purpose of service tax which inter alia provide that in case the refund is not given within 3 months from the date of receipt of refund application, interest is payable on such amount.

(a) Rate of interest: The rate of interest should be, not below 5% and not exceeding 30% per annum as is fixed by the Central Board of Excise and Customs (Board). The existing rate of interest fixed by the Board is 6% per annum.

(b) Period for which interest is payable: The interest on delayed refunds is payable for the period commencing from the date immediately after the expiry of the said 3 months till the date of refund.