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 charging limited to statutory prospective application; recovery of admitted unpaid liabilities may proceed without adjudication.
Administrative guidance and a Board circular treat duty disclosed in returns but unpaid as an admitted liability, permitting recovery of duty, interest and penalty without issuing a show cause notice or conducting fresh adjudication. Separately, principle authorities indicate that levy of interest is a substantive provision that must be grounded in statute and applies prospectively, so interest cannot be demanded for periods before the statutory insertion of an interest clause.