Recomputation of surcharge may follow a later Supreme Court ruling, but interest is confined to the period after legal clarification.

A later Supreme Court declaration of law can justify recomputation of surcharge for earlier assessment periods where the assessee had itself been a party to the reversed common judgment, because the declaration binds the authorities under Article 141 and the recomputation was not time barred in the absence of a prescribed limitation period. The Court also held that interest on the recomputed surcharge could not run for any period when the legal position remained unsettled; it accrued only from the date on which the law was finally clarified. The demand was therefore modified to exclude pre-28 October 2016 interest, with fresh recomputation directed.

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Issues: (i) Whether the Department could reopen and recompute surcharge for earlier assessment periods on the basis of the later Supreme Court ruling; (ii) Whether interest on the recomputed surcharge was payable for the entire period or only from the date of the Supreme Court ruling.

Issue (i): Whether the Department could reopen and recompute surcharge for earlier assessment periods on the basis of the later Supreme Court ruling.

Analysis: The earlier refund orders in the assessee's favour had attained finality, but the Court distinguished cases where the assessee itself had been a party to the very judgment that was later reversed by the Supreme Court. Since the assessee was a party to the common judgment that was set aside, the Supreme Court's declaration of law bound the authorities under Article 141 of the Constitution of India. The Court also held that the recomputation orders were not time barred merely because no specific limitation period for recomputation was prescribed and the orders were passed soon after the Supreme Court decision.

Conclusion: The recomputation of surcharge for the earlier periods was upheld and the challenge to reopening failed.

Issue (ii): Whether interest on the recomputed surcharge was payable for the entire period or only from the date of the Supreme Court ruling.

Analysis: The Court applied the principle that interest could not be levied for a period when the legal position was unsettled and became clear only upon the Supreme Court's ruling. Following the reasoning adopted in an earlier similar matter, the Court confined the liability to interest only after the date on which the law was finally clarified.

Conclusion: Interest on the differential surcharge was payable only from 28 October 2016 till the date of payment, and not for the earlier period.

Final Conclusion: The writ petitions were substantially rejected, but the demand was modified to exclude pre-28 October 2016 interest on surcharge, and fresh recomputation was directed accordingly.

Ratio Decidendi: A later Supreme Court declaration of law binds the authorities and can sustain recomputation against an assessee who was itself a party to the reversed judgment, but interest on the resulting demand is confined to the period after the law stood finally clarified.

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