Charging of interest

[Amresh kumar]

Sir,

A SCN was issued and adjudication order was passed before the interest clause was enacted in the year 1975. No demand of interest is there either in SCN or Order in original.

The company was in litigation. Now can the department insist for payment of interest. Interestingly the company was in BIFR also and in between department raised huge interest which was quashed by BIFR.

Any board circular in this regard will be very help full.

Thanks& regards

Amresh Kumar

AI Summary

Interest Demand Invalid for Periods Before 1975 Clause Enactment, Per Legal Provisions and Case Laws A query was raised regarding whether a department can insist on interest payment when a Show Cause Notice (SCN) and adjudication order were issued before the enactment of the interest clause in 1975. The company involved was under litigation and had its interest demand quashed by the Board for Industrial and Financial Reconstruction (BIFR). Respondents agreed that interest cannot be demanded for periods before the interest clause enactment. They referenced legal provisions and case laws supporting the position that interest can only be charged if explicitly provided by statute, and recovery cannot proceed without a substantive legal basis.