CESTAT allows 12% Interest on Delayed Refund of Service Tax Paid by Mistake

CESTAT awarded 9% interest on ₹28 lakh service tax refund delayed by five years due to departmental confusion over jurisdiction. The tribunal held that taxpayers shouldn't suffer for administrative ambiguities when taxes are paid under mistake of law. The case involved a consulting firm that erroneously paid service tax on export services before realizing its exempt status. The judgment establishes that refund delays caused by genuine errors deserve interest compensation, especially when departments take years to process claims. This reinforces the principle that government holding mistaken payments constitutes unjust enrichment. Tax professionals suggest this may prompt faster refund processing as departments seek to avoid interest liabilities on delayed amounts.