TaxTMI 
TaxTMI 
2023 (1) TMI 3
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....petition under Article 226 of the Constitution of India, challenges the order passed by the respondents granting refund of only principal amount without interest, which according to the petitioner is contrary to law. The prayer sought for, is as follows: "7. The petitioner, therefore, prays that this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to : (a) command the Respondent/s to pay interest to the petitioner at 6% p.a. on Rs.76,00,879/- from 1.4.2005 on Rs.34,39,839/- from 6.9.2008 and Rs.1,05,40,021/- from 13.7.2009 till the date of actual refund on the total amount of Rs.2,15,80,739/-; and/or (b) any other and further relief deemed just and proper be granted in the interest of justice; (c) to provide for the cost of this petition." 2. We have heard learned Senior Advocate Mr.S.P.Soparkar assisted by Mr.Monaal Davawala, learned Advocate for the petitioner, who has drawn the attention of this court to decision rendered in the case of very petitioner in Special Civil ....
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....lief to the petitioner for the refund for the sum of Rs.2,15,80,739/- (Rupees Two Crore Fifteen Lakh Eight Thousand Seven Hundred Thirtynine Only) for the Financial Year 2004- 2005, which was duly processed by the respondent No.3 on 18.11.2017. However, no interest on this refund of Rs.2,15,80,739/- (Rupees Two Crore Fifteen Lakh Eighty Thousand Seven Hundred Thirty-nine Only) had been provided. 5.3 According to the petitioner, he is entitled to the interest from the year 2005 on the refund for which he sent repeated reminders to various authorities and multiple communications starting from 23.10.2018 upto 13.04.2002 fell on deafears. 5.4 The petitioner, is therefore, before this Court urging the Court that under Section 54 of the Act the interest from the year 2005 as required under the law is required to be granted. 6. It would be apt to refer to Section 54 of the Act: "54.Interest on Delayed Refunds: (1)(aa) Where refund of any amount becomes due to the dealer by virtue of an order of assessment under section 41, for the specified year, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple i....
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....es Tax Officer. (2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Commissioner whose decision shall be final." 6.1 Section 54 of the Act thus clearly speaks of entitlement of dealer of an amount which becomes due to the dealer by virtue of the order of assessment under Section 41, for the specified year. In addition to the said amount, the simple interest at the rate of nine percent per annum, on the amount from the date immediately following the date of closure of the accounting year to which the said amount relates. 6.2 The proviso to this states that if the amount has been paid after the closure of the accounting year and such amount is required to be refunded, no interest shall be payable for the period from the date of closure of such accounting year to the date of payment of the amount. 6.3 The second proviso also states that no interest shall be payable on the amount of refund which does not exceed rupees one hundred. 6.4 This will apply to the refund which has been granted beyond the period of 30 days of the date of order. It als....
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....d or reduced, such interest shall be enhanced or reduced accordingly: (3) Where the realization of any amount remains stayed by the order of any court or authority and such order is subsequently vacated, interest shall be payable also for any period during which such order remained in operation. 8. This Court in case of State of Gujarat vs. Doshi Printing Press (Tax Appeal No.87 of 2015) was required to consider this very aspect and it has held that once the order is passed by the competent authority for assessment and the appeal is preferred before the Appellate Authority against such order, the principles of doctrine of merger would squarely apply and once the order of assessment merges with the order of the Appellate Authority in appeal, the assessment is finalized by the Appellate Authority in appeal. In the situation that would arise, the argument would not be available to the respondent that while giving effect to Section 54(1)(aa) of the GVAT Act, the effect would be given to the assessment made by the Assessing Authority and not to the further modification made the First Appellate Authority or thereafter by the Second Appellate Authority or even the Third Appell....
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.... by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are dversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 197879, it has been deprived of an amount of Rs.40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. COMPENSATION: The word 'Compensation' has been defined in P. Ramanatha Aiyar's Advanced Law Lexicon 3rd Edition 2005 page 918 as follows: "An act which a Court orders to be done, or money which a Court orders to be paid, by a person....
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....um of Rs.40,84,906 and interest at 9 per cent from March 31, 1986, to March 27, 1998, and in default, to pay the penal interest at 15 per cent, per annum for the aforesaid period. 6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noticed, in Sandvik case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to....
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....at Vs. Gujarat Fluoro Chemicals (supra). "14. In our view, the above-referred observation made by this Court in the above-referred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learned A.G.P. that the interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same." 6. Therefore, since the issue is covered by the decision of this Court dated 9.2.2015 rendered in Tax Appeal No.87 of 2015 and allied matters, we see no reason to deviate from the same. In the present tax appeals, no question of law arises and hence, both the tax appeals are dismissed." 8.4 Relevant findings and observations in M/s.Syngenta Crop Protection Pvt. Ltd. vs. State of Gujarat are as follow: "xxx Section 54 of the Gujarat Sales Tax Act pertains to interest of delayed refund. Relevant portion of which reads as under :- "54. Interest on delayed refund : [1] Where refund of any amount becomes due to the Dealer by virtue of an order of assessment under Section 41, for the specified year, he shall, subject to the provisions of this Section, be entitled....
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....der, liability to pay interest @ 9% per annum would continue till the actual payment. Clause (b) of sub-section [1] provides that where an amount is required to be refunded by the Commissioner by virtue of any other order made under the Act and is not refunded within ninety days of the order, the liability to pay simple interest @ 9% per annum would arise. According to learned AGP, case of the petitioner would fall under Clause (b) since the refund claim arises out of an order of appellate authority and not an order of assessment. However, such a question was examined by the Division Bench of this Court in the case of State of Gujarat v. Doshi Printing Press, [2015] 82 VST 384 [Gujarat] wherein, the Court held and observed as under : "9. In our view, once an order is passed by the competent authority for assessment and the appeal is preferred before the Appellate Authority against such order of assessment, and the Appellate Authority modifies the order of assessment, the principles of doctrine of merger would squarely apply. Once the order of assessment merges with the order of the Appellate Authority in appeal, one may say that the assessment is finalized by the ....
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....llows the appeal of an assessee, it only corrects the order of assessment. In other words, he gives legal shape to the contours of the matter, which in any case the Assessing Officer should have adopted. In terms of Section 54 [1] of the Gujarat Sales Tax Act, therefore, in such a situation, it cannot be stated that the refund claim of the assessee arises out of an order other than an order of assessment. The appellate authority while allowing the appeal merely corrects the assessment. It is such corrected assessment which would prevail. The refund claim of the assessee, therefore, cannot be stated to have arisen other than from the order of assessment. Somewhat similar provisions have been made in the Gujarat Value Added Tax Act concerning interest under Section 38. The said Section reads as under : "38. Interest on refund (1) Whether refund of any amount of tax becomes due to the dealer by virtue of an order of assessment under Section 34, he shall subject to the provision of this section be entitled to receive in addition to the amount of tax, simple interest at the rate of six percent per annum on the said amount of tax from the date immediately follo....
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....e same stands decided by the above referred decision of this court in the case of M/ s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat (supra). In the said case this court, relied upon an earlier decision of this court in the case of State of Gujarat v. Doshi Printing Press (supra) wherein the court turned down the contention that while giving effect to section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first appellate authority or thereafter, the second appellate authority or even third appellate authority, as the case may be. The court held that the interpretation canvassed by the revenue of section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of the doctrine of merger which is a well accepted doctrine incorporated in the system of administration of justice. Relying upon the above decision, the court held that when the statutory appellate authority allows the appeal of an assessee, it only corrects the order of assessment. In other words, he gives legal shape to the contours of the matter, which in any case the Assessing Officer shou....
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....f Asian Paints Limited vs. State of Gujarat (supra) also for admission and interim relief the matter is pending at the stage of condonation of delay. 12. The request on the part of learned AGP, Ms.Pooja Ashar was not to follow the earlier decision. 13. Learned senior advocate, Mr.Soparkar appearing with learned advocate, Mr.Davavala has pressed into service the order of the First Court in case of Asian Paints Limited vs. J.P.Gupta, State of Gujarat (Misc. Civil Application No.776 of 2020 in Special Civil Application No.1876 of 2018) where the Court has in contempt jurisdiction on dated 28.03.2022 has directed the amount to be refunded. "Learned counsel appearing for the complainant submit that order alleged to have been violated has since been complied. Placing his submission on record, contempt proceedings stands closed. Notice is discharged." 14. It is thus clear that the First Court directed the amount to be deposited when the challenge before the Apex Court had already been made. The State has accepted this order without a murmur. It is also to note that the case which has been followed for the purpose of seeking the refund, no stay has been granted b....