The Delhi High Court addressed a case involving M/s Seher and the Commissioner of Central Excise & CGST, Delhi East, where the petitioner sought a higher interest rate on a refund. M/s Seher had deposited ₹30,54,449 under protest during a service tax investigation in 2012. When the service tax demands were nullified by the CESTAT in 2022, the department refunded the amount with a 6% interest rate as per Section 35FF of the Central Excise Act. However, M/s Seher argued for a 12% interest rate, given the prolonged retention of funds by the department.
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The central issue was whether M/s Seher could claim an interest rate higher than the statutory 6% for the refund. The Delhi High Court ruled that the refund and interest provided were in strict accordance with Section 35FF and the relevant notification. The Court emphasized that when a statute prescribes a specific interest rate, courts must adhere to that framework unless the statute's validity is challenged. The Court found no grounds to deviate from the statutory provisions, as no substantial question of law arose under Section 35G of the Act.
The Court also dismissed reliance on previous judgments like Sandvik Asia Ltd., referencing the Supreme Court's stance in Gujarat Fluoro Chemicals Ltd., which affirmed that only statutory interest is due unless specified otherwise by law. Consequently, the appeal for a higher interest rate was dismissed, upholding the statutory rate of 6% as prescribed by Section 35FF.
Order Date - 08 July 2026
Parties: M/s Seher Vs Commissioner of Central Excise & CGST, Delhi East
Facts -
- Petitioner, M/s Seher deposited ₹30,54,449 under protest during a service tax investigation in 2012. Later, service tax demands raised through three show cause notices were confirmed by the adjudicating authority.
- M/s Seher challenged the order before the CESTAT, which, in June 2022, set aside the service tax demand, interest, and penalty, making the deposit refundable.
- The department refunded the amount and granted interest at 6% per annum. However, M/s Seher claimed that considering the department had retained its money for nearly 12 years, it should receive 12% interest instead.
- After the Commissioner (Appeals) and CESTAT rejected the claim for higher interest, M/s Seher approached the Delhi High Court seeking enhancement of the statutory interest rate.
Issue -
- Whether an assessee can claim interest higher than the statutory rate of 6% on refund of an amount deposited during investigation when Section 35FF of the Central Excise Act specifically prescribes the applicable rate.
order -
- The Court observed that the refund had already been granted along with interest strictly in accordance with Section 35FF and the applicable notification prescribing 6% interest. Since the appellant could not establish any error in applying the statutory provision, there was no justification for awarding a higher rate.
- It held that when Parliament has created a complete statutory mechanism governing payment of interest, courts must determine entitlement strictly within that framework. In the absence of any challenge to the validity of Section 35FF or the notification, the appellate court cannot substitute the prescribed rate with a higher one.
- The High Court clarified that where a statute itself creates the right to interest and specifies the applicable rate, the entitlement cannot ordinarily extend beyond the statutory provisions. Therefore, no substantial question of law arose for consideration under Section 35G of the Act.
- The Court also rejected reliance on Sandvik Asia Ltd., noting that the Supreme Court in Gujarat Fluoro Chemicals Ltd. had clarified that an assessee is entitled only to statutory interest unless the law provides otherwise. Consequently, the appeal was dismissed
