TaxTMI 
TaxTMI 
2020 (1) TMI 1654
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.... 06.08.1974 01.01.1974 to 30.06.1974 20,14,856.67 4. 02.06.1975 01.07.1974 to 31.12.1974 43,01,231.08 5. 07.11.1975 01.01.1975 to 30.06.1975 35,81,156.41 6. 28.01.1976 01.07.1975 to 30.09.1975 32,38,787.47 7. 28.01.1976 01.07.1975 to 30.09.1975 62,67,849.69 TOTAL 2,63,69,322.06 2. The adjudicating authority rejected the claims for refund vide orders dated 16.10.1979 and 07.03.1980 and an appeal filed against the same was rejected by the Collector (Appeals), Madras, on 01.12.1980. A second appeal filed before the Customs, Excise and Gold (Control) Appellate Tribunal (in short 'CEGAT') upon transfer of a revision application from the Additional Secretary of the Government of India, was allowed on 06.06.1989 in the following terms: 5. We have carefully considered the submissions made by the learned Sr. Counsel and the learned Jt. C.D.R. It is seen that the impugned order of the Appellate Collector was passed in 1981 before the law regarding valuation was settled by the Supreme Court's decision in the Bombay Tyres International Case in which in para 50 of the Supreme Court's order the Hon'ble Supreme Court had clearly held ....
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....er before the Bench was directed on 21.10.1991. There was no compliance by the Commissioner, but instead a request for extension of time that the Tribunal accepted, extending the time for compliance till 15.11.1991, compliance to be reported on 22.11.1991. 4. Around this time, Section 11B of the Central Excise Act 1844, (in short 'Act') was amended bringing into application the principle of unjust enrichment, with effect from 20.09.1991. 5. In the meantime, the petitioner moved the Delhi High Court with W.P. No. 3225 of 1991, praying for a direction to the authorities to implement the order of the Tribunal dated 06.06.1989. The High Court, vide order dated 18.07.1995, directed the petitioners to appear before the authorities for examination of the issue of grant of refund in the light of the amendment to Section 11 B of the Act. 6. As against the aforesaid direction, a Review Petition was filed before the High Court that confirmed its earlier direction. After enquiry as ordered, the authority passed order-in-original dated 28.03.1996 to the effect that the amendment to Section 11B of the Act would apply to those cases where applications for refund were pending before the authori....
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....eking stay were dismissed by the CEGAT by order dated 22.02.2000. As against the aforesaid order, a reference application was filed by the Revenue before the Delhi High Court and as against the rejection of the application seeking stay, a Writ Petition was filed by the revenue that came to be allowed by the High Court on 19.12.2000. The Court directed the Tribunal to consider the stay petition filed by the revenue and the same came to be dismissed by the Tribunal on 20.09.2002. The aforesaid order was also challenged by way of Writ Petition, that came to be dismissed on 02.04.2003. A Special Leave Petition challenging the aforesaid order was considered by the Supreme Court and by order dated 09.01.2004 the Bench held as follows: We see no reason to interfere save and except that the respondent is directed to file an undertaking in this Court within two weeks from today, that in the event of the appellant's succeeding finally in the reference proceedings, they shall return the amount with interest at such rate as the Court may fix. The appeal stands disposed of accordingly. No order as to costs. 12. Pursuant thereto, an amount of Rs.2,63,69,322/- was quantified as refundable ....
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....ng for Mr. S.P. Maharajan, learned counsel for the petitioner justifies the claim for interest stating that the assessee has been successful in regard to the issue of payment of duty on equalized freight charges by virtue of order passed on 06.06.1989; and there has been inordinate delay in issuing the refund legally due to it entitling it for interest and compensation for the loss of capital from the period 1973-76 till date. 19. He relies on the following case-law: i) Sandvik Asia Ltd Vs. Commissioner of Income Tax-I, Pune (2006(196) E.L.T 257 (SC) ii) Gujarat Fluoro Chemicals V. Commissioner of Income Tax (Special Civil Application No.12855 of 1994 dated 03.07.2007) iii) Commissioner of Income Tax, Gujarat V. Gujarat Fluoro Chemicals (2013(296) ELT 433(SC)) iv) Vamadev Exports Vs. Commissioner of Customs (Appeals) (2018 (360) ELT 992). 20. The stand of the Department as projected in counter as well as argued by Mr.Vijay Karthikeyan, learned Standing Counsel, is two-fold. The impugned order is an appealable order and thus extraordinary jurisdiction under Article 226 of the Constitution of India is not liable to have been invoked. Secondly, there is no provision under th....
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....tax collected by deduction at source. Before introduction of Section 244(1A) the assessee was not entitled to get any interest from the date of payment of tax upto the date of the order as a result of which excess realisation of tax became refundable. Interest under Section 243 or Section 244 was payable only when the refund was not made within the stipulated period upto the date of refund. But, if the assessment order was reduced in appeal, no interest was payable from the date of payment of tax pursuant to the assessment order to the date of the appellant order. 24. A Division Bench of the Supreme Court in Union of India and Another Vs Shreeji Colour Industries (supra), reiterated the above view in the context of a refund sought under the provisions of the Central Excise Act. 25. In the case of VBC Industries ltd. (supra), a Division Bench of this Court considered a claim for interest in a statutory appeal under the Customs Act and negatived the same making a specific distinction between a claim of interest in a statutory appeal vis-à-vis a claim made under general provisions of law. Discussing the judgment of the Supreme Court in the case of Sandvik Asia Ltd. (supra), t....
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....from the date of application until date of payment of arrears of amount of excess Duty to Consumer Welfare Fund. 40. Since we have noticed above that prior to insertion of Section 11BB there was no statutory provision providing for interest on refund of amount of excess Duty if not paid within a specified date, there is no statutory provision providing for interest on non refund of amount of excess duty within a specified period or on specified date until insertion of Section 11BB. In the absence of any statutory provision for payment of interest no mandamus could be issued for payment of interest for the period prior to one provided in Section 11BB. 28. In Sandvik Asia Ltd. Vs. CIT-1 Pune [(2006) 196 ELT 257 (SC)], the Bench was concerned with a claim for interest on interest and states at paragraph 40 to 42 and 45 to 50 as follows: 40. In the present appeal, the respondents have argued that the compensation claimed by the appellant is for delay by the revenue in paying of interest, and this does fall within the meaning of refund as set out in Section 237 of the Act. The relevant provision is Section 240 of the Act which clearly lays down that what is relevant is whether any ....
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....est was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents ....
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.... be ordered for the loss of capital. A categoric distinction is made between a statutory claim of interest and a claim of compensation in law. 30. In my considered view, the issues in this writ petition stand settled by the judgement of the Supreme Court in Gujarat Fluoro Chemicals (supra). 31. The decisions cited by the revenue do not advance their case, as the claim for interest in the present case for the periods prior to insertion of Section 11BB, is considered solely as a measure of compensation, in the light of the admitted facts relating to the substantial, and, in my view, unjustified periods of delay. 32. Section 11B providing for the levy of interest was inserted with effect from 20.09.1991 and thus, an assessee may claim statutory interest only from the said date. The Revenue, in this matter, has granted interest for the aforesaid period and contends that there can be no additional claim over and above the interest already granted. 33. In Gujarat Fluoro Chemicals, the Bench was concerned with delays ranging from twelve(12) to seventeen (17) years in the grant of compensation on the delayed payment of interest. The grant of interest and compensation on delayed payment....
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.... the requisites for obtaining refund specified in the Amendment Act, 1991, is called for in such cases. The above aspects are fairly clear. Section 11B(2) and (3) cannot be made applicable to refunds already ordered by the court or the refund ordered by the statutory authorities, which have become final. It follows from a plain reading of Section 11B, Clauses (1) (2) and (3) of the Act. The provisions contemplate the pendency of the application on the date of the coming into force of the Amendment Act or the filing of an application which is contemplated under law, to obtain a refund, after the Amendment Act comes into force. I am of the opinion, that if the said provisions are held applicable, even to matters concluded by the judgments or final orders of courts, it amounts to stating that the decision of the court shall not be binding and will result in reversing or nullifying the decision made in exercise of the judicial power. The legislature does not possess such power. The court's decision must always bind parties unless the condition on which it is passed are so fundamentally altered that the decision could not have been given in the altered circumstances. It is not so he....
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.... Hon'ble Mr.Justice J.S. Verma, Hon'ble Mr. Justice S.C. Agrawal, Hon'ble Mr. Justice A.S. Anand and Hon'ble Mr. Justice B.N. Kirpal. Since the judgment of Hon'ble Mr. Justice B.P. Jeevan Reddy amounts to a judgment of five Hon'ble Judges in a 9 Judge Bench, hence it is the majority judgment and anything inconsistent with that judgment in the judgment of other Hon'ble Judges has to be disregarded. 12. Thus in para 57 of his judgment Hon'ble Mr. Justice B.P. Jeevan Reddy observed:- Page 0008 The first decision of this Court to consider the amended Section 11B is in Union of India v. Jain Spinners Ltd. The validity of the 1991 (Amendment) Act was, however, neither raised nor considered by the court. The impugned orders of the High Court, made before the coming into force of the 1991 (Amendment) Act, directing refund of the excess duty collected to the manufacturers, this Court held, would defeat the provisions of amended Section 11B which had come into force during the pendency of the refund proceedings. The Court held that so long as the refund proceedings are pending, the amended provisions get attracted and disentitle the manufacturer-payer from....
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....given in the altered circumstances". 15. The same view has also been expressed by Hon'ble Mr. Justice S.C. Sen in para 255 of the judgment which states:- Page 0009 "I shall now examine the other provisions of the newly-added sections. Sub-section (1) of Section 11B requires an application for refund to be made. Sub-section (2) requires the Assistant Commissioner to pass an order of refund provided the conditions set out therein are fulfillled. Subsection (3) merely lays down that no refund shall be made except as provided in Sub-section (2). There is a non obstante clause that this will operate notwithstanding anything to the contrary contained in any judgment, decree, order etc. It is obvious that new provisions will apply in cases where applications for refund were made before the new provisions came into force and also subsequently. Sub-section (3) has no retrospective effect. When a case has been finally heard and disposed of and no application for refund need be made, Sub-section (3) cannot apply. If there is a judgment, decree or order which has to be carried out, the legislature cannot take away the force and effect of that judgment, decree or order, except by amendi....
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....cts and circumstances of this case, and granting statutory interest only for the period 26.08.1995 to 23.02.2004 does not take into account the facts and circumstances in proper perspective, either factually or legally. 40. Dehors the rigour of Section 11BB, an assessee is always entitled to seekrecompense for inordinate delay in the grant of refunds. The nine Judge Bench in the case of Mafatlal (supra) has referred to availability of alternate remedies, in cases where the assessee is in a position to establish unjustified inordinate delay and procrastination on the part of the Department in issuing the refund. The entitlement of the petitioner to interest as has been decided as early as in 1989. The amendment to Section 11B has taken place thereafter and in any event, the Bench, in the case of Mafatlal (supra) rendered on 19.12.1996, has clarified the position unequivocally that the principle of unjust enrichment would apply only to those cases that were pending at the time when the amendment was occasioned. Pursuit of the second round of litigation from 1995 till the judgment of the Supreme Court on 02.09.2015 was one that was quite unwarranted and seen to be an exercise in futi....