High Court rules in favor of petitioner, orders 12% interest rate on refund, rejecting Revenue's 6% claim. The High Court clarified that the petitioner was entitled to interest at 12% per annum on the refund amount, rejecting the Revenue's argument for a 6% ...
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High Court rules in favor of petitioner, orders 12% interest rate on refund, rejecting Revenue's 6% claim.
The High Court clarified that the petitioner was entitled to interest at 12% per annum on the refund amount, rejecting the Revenue's argument for a 6% interest rate. The Court directed the Revenue to pay the interest within two months, aligning with the Supreme Court's decision on interest payment for delayed refunds.
Issues: Clarification and/or modification of judgment regarding the rate of interest payable on delayed refund of pre-deposit amount.
Analysis: The petitioner appealed under Section 35G of the Central Excise Act, 1944 against a Tribunal order that did not direct payment of interest on a refund. The High Court allowed the appeal, holding that interest was payable on the pre-deposit amount as per a Supreme Court decision. The petitioner sought clarification on the rate of interest, claiming 12% per annum based on the Supreme Court judgment. The Revenue argued that interest should be paid at 6% per annum as per a notification. The Court noted that the Supreme Court decision governed the case, directing interest payment at 12% per annum, as no specific rate was mentioned in the circular. The Court rejected the Revenue's argument that the statutory rate was 6%, clarifying that the petitioner was entitled to 12% interest. The Court emphasized parity with the Supreme Court decision and directed the Revenue to pay the interest within two months.
The Revenue contended that the matter was sub-judice before the Supreme Court and that the statutory rate of interest was fixed at 6% per annum. The Court rejected this argument, clarifying that the Supreme Court's decision on interest payment at 12% per annum applied to the petitioner's case. The Court highlighted that the introduction of Section 35FF did not affect the petitioner's entitlement to interest at 12% per annum. The Court held that the petitioner should receive interest at the rate specified by the Supreme Court, directing the Revenue to pay the interest within two months.
The Court analyzed the Supreme Court's decision on interest payment for delayed refunds, emphasizing that the absence of a statutory provision led to the 12% per annum rate. The Court rejected the Revenue's argument that the statutory rate was 6%, clarifying that the petitioner was entitled to 12% interest. The Court directed the Revenue to pay the interest within two months, maintaining parity with the Supreme Court's decision.
In conclusion, the High Court clarified that the petitioner was entitled to interest at 12% per annum on the refund amount, rejecting the Revenue's argument for a 6% interest rate. The Court directed the Revenue to pay the interest within two months, aligning with the Supreme Court's decision on interest payment for delayed refunds.
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