AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 469
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....sum of Rs. 3,66,649/- which was paid by the petitioner to the Department as interest in excess of actual interest liability. 2. As per Rule 8 of the Central Excise Rules, 2002, the petitioner deposited additional interest amount on account of delayed payment of excise duty. However, the Rajasthan High Court in case of 'Lucid Calloids Ltd. Vs. Union of India', 2006 (200) ELT-370, held that Sub-Rule (3) of Rule 8 is ultra vires to Section 11AB (1) of the Central Excise Act, 1944 (for short, 'the Act'), therefore, interest cannot be charged more than 2% per month. Accordingly, the petitioner moved application dated 20.04.2007 before the respondents-Department seeking refund of the excess interest amount of Rs. 3,66,649/-. The said applicati....
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....Constitution of India specifically for the same relief. 6. Learned counsel for the revenue further submits that the respondents are not required to refund the amount, which was deposited by the petitioner at the relevant time in terms of their own self-assessment. Learned counsel relies upon paragraph No. 99 (ii) of Mafatlal's case (supra). For reference, same is reproduced herebelow: "99 (ii) Where, however, a refund is claimed on the ground that the provisions of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception: where....
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....vied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. The Act does not contemplate any of its provisions being declared unconstitutional and therefore it does not provide for its consequences. Rule 11/Section 11B are premised upon the supposition that the provisions of the Act are good and valid. But where any provision under which duty is levied is found to be unconstitutional, Article 265 steps in. In other words, the person who paid the tax is entitled to claim refund and such a claim cannot be governed by the provisions in Rule 11/Section 11B. The very collection and/or retention of tax without the authority of law entitles the person, from whom it i....
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....f law was discovered by the manufacturer / assessee on the declaration of invalidity of the provision by the court. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under Section 72. Section 72 contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional....
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....at they are not obliged to return the excess amount. An amount received on the basis of provisions of law, which has been declared ultra vires has to be treated as in contravention of provision of Article 265 of the Constitution of India and the same has to be refunded. The Supreme Court in Mafatlal's case (supra) has held that a person is entitled to receive the amount once the Court holds a person entitled to it and as a corollary the Department would not be entitled to keep the same with them. Therefore, we hold that even if an application is not moved, the department would be obliged to refund the amount to concerned person from whom the excess amount has been received unlawfully after the provision has been declared ultra vires.. 11....