TaxTMI 
TaxTMI 
2025 (11) TMI 940
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....DSM Sugar, Rajpura, P.O. Rajpura, Dist.-Sambhal, U.P. is allowed in above terms with consequential relief." 2.1 The Respondent is engaged in manufacturing of sugar and molasses. During January 2007 to June 2007, the respondent availed and utilized Cenvat Credit on Items of Iron and Steel and Welding Electrodes etc. treating those items as inputs/capital goods. During the said period, the appellant availed Cenvat Credit of Rs. 4,30,71,952/- on impugned items, for which two Show Cause Notices dated 03/01/2008 and 30/04/2008 were issued to the respondent. The respondent reversed Rs. 78,01,415/- from his CENVAT Credit account under protest in the month of June 2008. 2.2 Both the Show Cause Notices were adjudicated by the Commissioner vide Order-In-Original No. 92-93/Commr./Hpr/2016-17 dated 31/03/2017 allowing Cenvat Credit of Rs. 1,38,820/- and confirming demand of Cenvat Credit of Rs. 4,29,33,132/-with interest and penalty. 2.3 The respondent filed appeal before the Tribunal against the Order-In-Original dated 31/03/2017. The Tribunal vide Final Order No. A/70260/2019 dated 13/02/2019 set aside the OrderIn-Original dated 31/03/2017 and allowed the appeal in favour of the pre....
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....s reversed/deposited by the appellant on 03/07/2008 during investigation. Later on, demand was confirmed on adjudication and the first appeal filed before the CESTAT has been decided on 13/02/2019 in favour of assessee setting aside the entire demand. Thereafter, the application for refund of the amount paid during investigation, has been filed and refund was granted on 26/08/2019 but interest was not granted on entire amount of refund from the dated of deposit. Therefore, I find that the following issues are to be decided in the present appeal proceedings:- 1. Whether interest is payable at prescribed rate on entire refund amount, as prayed by the appellant; 2. Whether interest is payable from the date of deposit/reversal of amount by the appellant; 6.2 In para 3.1 and 3.2 of Board's Circular No. 984/8/2014- CX., dated 16-09-2014, issued from F. No. 390/Budget/1/2012-JC, it has been clarified that - 3. Payment made during investigation: 3.1 Payment made during the course of investigation or audit, prior to the date on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of Rs. 10 crores, can be considered to be ....
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....ifferently. Moreover, while an action lies for recovery of the duty that has not been paid by resorting to provisions of Sections 11A and 11 of the Act, no similar action lies for recovery of pre-deposit. In case the Court or Appellate Authority finds that the amount required to be pre-deposited for hearing the appeal has not been paid or short paid, they can refuse to hear the appeal, but cannot proceed to recover the said amount of pre-deposit. All the above distinctions clearly make the pre-deposit distinguishable from payment of duty. Para 5.2 of the above Circular also affirms that "Predeposit for filing appeal is not payment of duty." 6.5 In the instant case, the appellant reversed Rs. 78,01,415/- from his Cenvat Credit account under protest in the month of June 2008 before adjudication of the SCNs. The demand of Rs. 4,29,33,132/- was confirmed by the Commissioner vide OIO dated 31/03/2017 but finally set aside by the Hon'ble CESTAT vide Final Order No. A/70260/2019 dated 13/02/2019 allowing Party's appeal. I thus find that the amount of Rs. 78,01,415/-, though not payable by the appellant, was retained by the Department from the date of deposit/reversal in t....
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....nd - Amount of Rs. 2,38,00,000 deposited by petitioner of its own volition, during audit /investigation, though under protest - Refund of said amount sought vide letter dated 2 May, 2018 - Petitioner entitled to interest @ 6% per annum from date of deposit." (iii) The Hon'ble CESTAT, Principal Bench, New Delhi in the case of BSL Ltd. vs. CCE [Final Order No. 50699/2019 dated 15/05/2019], has observed that even though there is no provision for grant of interest over delayed payment of interest, yet it is allowable because there is no prohibition in law. (iv) Recently, the Hon'ble Regional Bench of CESTAT, Chandigarh, in the case of Riba Textiles Ltd. Vs. CCE & ST, Panchkula [Final Order No. 60015/2020 dated 07/01/2020], relying upon the decision of the Hon'ble Apex Court in the case of Sandvik Asia Limited vs. CIT, Pune [2007 (8) STR 193 (SC)] and the decision of Hon'ble High Court of Madras, held that the issue has been settled by Tribunal in the case of M/s Marshal Foundry & Engg. Pvt. Ltd. Vs. CCGST, Faridabad & Others vide Final Order No. 61058-61062/2019 read-with Corrigendum issued dated 02/12/2019 and therefore they may be allowed to claim th....
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....t made during investigation: 3.1 Payment made during the course of investigation or audit, prior to the date on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of Rs. 10 crores, can be considered to be deposit made towards fulfillment of stipulation under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962. Any shortfall from the amount stipulated under these sections shall have to be paid before filing of appeal before the appellate authority. As a corollary, amounts paid over and above the amounts stipulated under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962, shall not be treated as deposit under the said sections. 3.2 Since the amount paid during investigation/audit takes the colour of deposit under Section 35F of the Central Excise Act, 1944 or Section 129E of the Customs Act, 1962 only when the appeal is filed, the date of filing of appeal shall be deemed to be the date of deposit made in terms of the said sections. 3.3 In case of any short-payment or non-payment of the amount stipulated under Section 35F of the Central Excise Act, 1944 or Section 129E ....
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....ed in 2006 whereas in the present case the appeal has been filed after 06.08.2014 therefore, it will be deemed that the pre-deposit was made and considered under the new Section 35F. This is also evident from the fact that no stay application could have been filed seeking waiver of pre-deposit further, all the Appellant was required to comply to make mandatory pre deposit under the provision of new Section 35F after 06.08.2014. In such a view, the pre-deposit was made only under the new Section 35F and accordingly the proviso to Section 35FF has no application, thus, interest is payable from the date of deposit only in terms of Section 35FF. 4.4 In case of Balaji Wire Pvt. Ltd. [2018 (12) TMI 1577 - CESTAT Allahabad], following has been held: "5. Heard the parties and considered the submissions. We find that the learned Commissioner(Appeals) has examined the issue and observed as under:- "5.1 I have carefully gone through the facts and records of the case as well as the submissions made by the appellant. I find that the adjudicating authority was fully convinced that the appellant is eligible for the interest at appropriate rate as per Notification No.67/2003- ....
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....ngly, as held by Apex Court, the interest to be paid will be provided as per the statute. 6. In view of above discussions and findings, the appeals of M/s.Balaji Wires (P) Ltd., Plot No.139, 139A, 139B, 140, 138, 141 & 142, Anand Industrial Estate, Mohan Nagar, Ghaziabad, against the Orders-in-original Nos.236 & 237/Div.-II/GZB/2017-18 both dated 29.06.2017, which are set aside, are allowed with the direction to the concerned authority to sanction and pay the applicable interest within ten(10) days of this order." 6. We further take note of the fact that the issue has been examined by the Hon'ble Madras High Court in the case of Commissioner of C.Ex., Chennai-II v. Ucal Fuel Systems Ltd. [2014 (306) E.L.T. 26 (Mad.)] and the Hon'ble High Court has observed as under:- "6. We are in full agreement with the finding rendered by the learned single Judge that the limitation contained in Section 11B of the Central Excise Act is not applicable to the case of the first respondent since the amount in question was not paid towards excise duty but only by way of deposit during investigation. Moreover, as per Section 11BB of the Central Excise Act, this Court can orde....
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....not be applicable. This is for the reason that the appellant was not claiming refund of duty. The applicant, as noticed above, had claimed refund of the revenue deposit. Such a finding has also been clearly recorded by the Tribunal in the order dated 31-1-2017, which order has attained finality. 33. There is no provision in the Excise Act, which deals with refund of revenue deposit and so rate of interest has not been prescribed, when revenue deposit is required to be refunded. 34. To be able to have some guidance regarding the rate of interest in case revenue deposit has to be refunded, the aid of the interest provisions under Section 11AA (which deals with interest on delayed payment of duty), Section 11BB (which deals with interest on delayed refunds under Section 11B(2) and Section 11DD (which deals with interest on the amount collected in excess of the duty) can be taken. 35. The Notification issued under Section 11AA of the Excise Act provides interest at the rate of fifteen per cent per annum. The notification is reproduced below : Notification No. 15/2016-C.E. (N.T.), dated 1-3-2016 Notification Under Section 11AA Rate o....
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....2011-C.E. (N.T.), dated 1-3-2011 Notification Under Section 11AB Rate of interest on delayed payment of duty. - In exercise of the powers conferred by section 11AB of the Central Excise Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 66/2003-Central Excise (N.T.), dated the 12th September, 2003 [GSR (E), dated the 12th September, 2003], except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at eighteen per cent per annum for the purpose of the said section. This notification shall come into force from the 1st day of April, 2011." 39. In this connection reference can also made to the decisions of the Allahabad High Court in Pace Marketing Specialities and Ebiz.Com Private Limited, wherein after making reference to the decision of the Supreme Court in Sandvik Asia Ltd., the High Court granted interest at the rate of 12% per annum in matters relating to refund of amount deposited during investigation and adjudication. 40. In Riba Textiles, the Tribunal also granted i....
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....from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation: If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable." 16. Section 35FF of the Central Excise Act, 1944 deals with the situation in hand, the same is extracted below:- "Section 35FF. Interest on delayed refund of amount deposited under the proviso to Section 35F- Where an amount deposited by the appellant in pursuance of an order passed by the Commissioner (Appeals) or the Appellate Tribunal (hereinafter referred to as the appellate authority) under the first proviso to section 35F, is required to be refunded consequent upon the order of the appellate authority and such amount is not refunded within three months from the date of communication of such order to the adjudicating authority, unless the operation of the order of the appellate authority is stayed by a superior court or tribunal, there shall be paid to ....
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....ejudice to the lakhs and lakhs of assesses. Very large number of assesses are adversely 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 1978-79, 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: 46. The word 'Compensation' has been defined in P. RamanathaAiyar'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 whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration....
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....or the appellant fairly restricted his claim towards interest from 31.03.1986 to 27.03.1998 on which date a sum of Rs.40,84,906/- was refunded. 50. The assessment years in question in the four appeals are the assessment years 1977-78, 1978-79, 1981-82 and 1982-83. Already the matter was pending for more than two decades. We, therefore, direct the respondents herein to pay the interest on Rs.40,84,906 (rounded of to Rs.40,84,900) simple interest @ 9% p.a. from 31.03.1986 to 27.03.1998 within one month from today failing which the Department shall pay the penal interest @ 15% p.a. for the above said period." 18. As the Hon‟ble Apex Court has answered the issue holding that the assessee is entitled to claim interest from the date of payment of initial amount till the date its refund. Therefore, I hold that the appellants are entitled to claim the interest on delayed refund from the date of deposit till its realization. 19. Further, the interest on the refund shall be payable @ 12% per annum as held by Hon‟ble Kerala High Court in the case of Sony Pictures Networks India Pvt.Ltd.-2017 (353) ELT 179 (Ker.) wherein it has held as under:- "1....
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.... Tribunal observed as under:- "5. I have considered the submissions made by both the sides. I notice that appellants deposited amount in September, October and in November 2004, as per the directions of the department. In September 2004, the Hon‟ble Gujarat High Court had dismissed the SCA filed by the appellants against the order of the Tribunal rejecting the appeal for failure to make the pre-deposit. This SCA was dismissed in September 2004 and SLP was filed in the Hon‟ble Supreme Court in October 2004. In July 2005, the Hon‟ble Supreme Court ordered that if the amount directed to be deposited by the Tribunal is deposited, the appeals before the Tribunal has to be restored and decided on merits. In these circumstances, the amount deposited by the appellant is to be treated as pre-deposit since the matter had not attained finality during the relevant period. Therefore, refund is to be treated as refund of pre-deposit made when the appeal was pending. There is no dispute that the amounts deposited is duty but this is not the issue which has been taken into account while precedent decisions have allowed the interest at 12% on the refunds claimed in respec....
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....ollected in excess of the duty from the buyer of such goods, the person who is liable to pay such amount shall, in addition to the amount, be liable to pay interest at such rate not below ten per cent., and not exceeding thirty-six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette. 33. ......." 9. In view of the entire above discussion, I hold that the appellant was entitled for the disbursement of entire amount of Rs. 60 lakh being the amount of pre-deposit. The adjustment of Rs. 38,79,769/- was absolutely unreasonable and unjustified for being not pertaining to the impugned issue. Appellant is simultaneously entitled for the interest to be calculated at the rate of 12% from the date of payment of the said amount to be calculated in accordance with the table showing date of deposit as mentioned above." 4.7 We find that all the above decisions are based on the decision of the Hon'ble Supreme Court in the case of Sandvik Asia. Interpreting the above decision of the Hon'ble Supreme various benches of Tribunal have concluded in favour of the grant of interest from the date of deposit and at the ra....
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.... The provisions relating to an interest of delated payment of refund have been consistently held as beneficial and non-discriminatory. It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision. 23. The respondents have not explained in any manner the issue of delay as raised by the writ applicants by filing any reply. 24. The chart indicating the delay referred to above speaks for itself. 25. In the overall view of the matter, we are inclined to hold the respondents liable to pay simple interest on the delayed payment at the rate of 9% per annum. The authority concerned shall look into the chart provided by the writ-applicants, which is at Page-30, Annexure-D to the writ application and calculate the aggregate amount of refund. On the aggregate amount of refund, the writ-applicants are entitled to 9% per annum interest from the date of filing of the GSTR-03. The respondents shall undertake this exercise at the earliest and calculate the requisite amount toward the interest. Let this exercise be undertaken and c....
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....per annum. Considering the stand taken by the appellants, at the interim stage, this Court directed the appellants to make good payment of interest at the rate of 6 per cent. Accordingly, the amounts representing interest at that rate have since then been made over. .......... 13. The instant cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. In light of these provisions, the question which arises for consideration is whether the High Court was justified in awarding interest at the rate of 9 per cent per annum. 14. Before we deal with the question, it must be stated that initially a bench of two Judges of this Court in Union of India and Others v. Orient Enterprises and Another [(1998) 3 SCC 501 = 1998 (99) E.L.T. 193 (S.C.)] had observed that a Writ Petition under Article 226 of the Constitution filed solely for relief for payment of interest on delayed refund would not be maintainable. For facility, the relevant portion from the said decision is quoted here : ....
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....forcement of a legal right available to them under any statute. The claim for interest was in the nature of compensation for wrongful retention by the appellants of money that was collected from the respondents by way of customs duty, redemption fine and penalty. In view of the law laid down by this Court in Suganmal [AIR 1965 SC 1740: 56 ITR 84: 16 STC 398] a writ petition seeking the relief of payment of interest on delayed refund of the amount so collected could not, in our opinion, be maintained. The decisions on which reliance has been placed by Shri Rawal were cases where the legality of the orders requiring payment of tax or duty were challenged and the High Court in exercise of its jurisdiction under Article 226 of the Constitution, while setting aside the said orders, has directed the refund of the amount so collected with interest. The direction for payment of interest in these cases was by way of consequential relief along with the main relief of setting aside the order imposing the tax or duty. Those cases stand on a different footing and have no application to the present case. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and ....
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....ition for issue of writ of mandamus will not normally be entertained for the purpose of merely ordering a refund of money, to the return of which the petitioner claims a right. The aggrieved party seeking refund has to approach the civil court for claiming the amount, though the High Courts have the power to pass appropriate orders in the exercise of the power conferred under Article 226 for payment of money. (Vide Suganmal v. State of M.P. [AIR 1965 SC 1740]) (iv) There is a distinction between cases where a claimant approaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment, etc. While a petition praying for mere issue of a writ of mandamus to the State to refund the money alleged to have been illegally collected is not ordinarily maintainable, if the allegation is that the assessment was without a jurisdiction and the taxes collected was without authority of law and therefore the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition. (Vide Salonah Tea Co. Ltd.....
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....interest calculated from the first day of April of that assessment year to the date of assessment. No difficulty arises in such a case. The difficulty arises in the following situation: indeed it is one of the many situations - not satisfied with the order of assessment, the assessee files an appeal. The appeal is allowed as a consequence of which, the assessment order is revised. As a result of such revised assessment made pursuant to the appellate order, the tax refundable to the assessee becomes larger - say whereas, according to the original assessment he was entitled to refund of Rs. 10,000/-, he becomes entitled to a total refund of Rs. 15,000/- as a result of revised assessment made pursuant to the appellate order. The question is - on what amount and upto which date is the interest payable? On being elaborated, the question yields the following sub-questions : (a) is the interest payable only on Rs. 10,000/- and if so, whether the interest is payable till the date of first/original assessment or till the date of the revised assessment? (b) is the interest payable on Rs. 15,000/- and if payable, is it payable only till the date of first/original assessment ....
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.... completely ignore Section 26 of the Act, while awarding interest at 9% per annum on the belated payment of compensation. 10. The question as to when and in what circumstances, interest could be awarded on belated payment of compensation, was considered by this Court in Union of India v. Parmal Singh [(2009) 1 SCC 618]. This Court first referred to the general principle and then the exceptions thereto, as under : (SCC pp. 624-25, paras 12-13) "12. When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, the courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property. ... 13. ... The said general principle will not apply in two circumstances. One is where a statute specifies or regulates the interest. In that event, interest will be payable in terms of the provisions of the statute. The second is where a statute or contract dealing with the acquisition specifically bars or prohibits payment of interest o....
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....n sub-section (1) thereof. We are therefore of the view that whether the payment is made by transferable bonds or by cash, the rate of interest can be only at 3% per annum for a period of 20 years from the date of taking possession. 12. The next question that requires consideration is about the rate of interest if the payment is not made even after 20 years, and whether it should be only at the rate of 3% per annum, even after 20 years. Section 26 is silent about the rate of interest payable, if the compensation is not paid within 20 years. We are therefore of the view that Section 26 contemplates payment of the compensation within 20 years from the date of taking possession with interest at 3% per annum; and for the period beyond 20 years, the said provision regarding interest will cease to apply and the general equitable principles relating to interest will apply; and interest can be awarded at any reasonable rate, in the discretion of the court. Interest at the rate of 6% per annum, beyond 20 years would be appropriate and payable on equitable principles." (C) In Sandvik Asia Ltd., a Bench of two Judges of this Court was called upon to consider whether the inor....
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....or two periods, namely, for Assessment Years 1977-1978, 1978-1979, 1981-1982, 1982-1983 in a sum of Rs. 40,84,906 and interest @ 9% from 31-3-1986 to 27-3-1998 and in default, to pay the penal interest @ 15% per annum for the aforesaid period. 5. 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 [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] 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. 6. As we have already noticed, in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] 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....
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....operty the State has to justify both the grounds which may depend on scheme of the statute, legislative policy, object and purpose of the legislature and other related factors. (f) Statute, depriving a person of his property is, therefore, amenable to judicial review on grounds hereinbefore discussed." The aforestated answers and especially one at serial (e) show the context in which the issue of compensation was considered by this Court, which is completely distinct and different from the issue with which we are presently concerned. 18. Coming back to the present cases, the relevant provision has prescribed rate of interest at 6 per cent where the case for refund is governed by the principal provision of Section 56 of the CGST Act. As has been clarified by this Court in Modi Industries Ltd. and Godavari Sugar Mills Ltd. wherever a statute specifies or regulates the interest, the interest will be payable in terms of the provisions of the statute. Wherever a statute, on the other hand, is silent about the rate of interest and there is no express bar for payment of interest, any delay in paying the compensation or the amounts due, would attract award of int....
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....We find that the issue involved in the present case is no longer resintegra and is squarely covered by the decisions of Tata Iron and Steel Company [2013 (295) E.L.T. 526 (Jhar.)] Hon'ble Jharkhand High Court observed as follows: "12. Interest can be awarded on the money withheld by a party on the basis of either statutory provision of law or by virtue of contractual liability of payment of interest. In other case, the Court may award interest as damages to the aggrieved party on account of illegal retention of money by the party withholding the money. So far as rate of interest is concerned, it is governed by the statutory provision in civil suits when interest claimed is neither as per statutory provision for interest, nor is a contractual interest. In the third category, i.e. when interest is awarded as damages for illegal retention of money, rate of interest is fixed by the courts. When one party is directed to pay the amount to other party by the order of the court, which may or may not contain conditions of payment of interest. If the order contains condition of payment of interest, then irrespective of whether there is statutory provision for payment of interest or ....
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....erim order and was entitled to recover more amount as the amount of Rs. l crore was not the total liability of the writ petitioner as has been admitted by the learned counsel for the petitioner that the amount of Rs. l crore was not the total liability. Hon'ble Supreme Court allowed Civil Appeal No. 1460/1990 preferred by the writ petitioner on 22-11997. Therefore, after 22-1-1997 there is no justification for the respondents to retain the money which they got by virtue of the order passed by this Court in the writ petition on 30th April, 1986. 14. The facts have been referred in detail because of the peculiar reason, which shows that the respondent-Revenue either did not or could not recover the demanded amount from the petitioner and the petitioner approached this Court by filing writ petition, being CWJC No. 219/1986R. The petitioner, to get the benefit of the interim order dated 30th April, 1986 passed in the petitioner's writ petition, CWJC No. 219/1986R, was supposed to deposit Rs.1 crore, but since the order of this Court dated 30th April, 1986 was modified by Hon'ble Supreme Court, vide order dated 12th August, 1986, the petitioner deposited Rs. 50 lacs in two inst....
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....t of law when challenged in the court of law. Here in this case, the petitioner succeeded in the first round of litigation before the learned Single Judge, but lost the battle in the second round before the Division Bench and ultimately succeeded in third round before the Supreme Court. Therefore, it cannot be said that the respondents had no legal right to raise the demand at the time when the position of law was not very clear because of the reason that ultimately the view taken by the respondent-Department was found to be erroneous. Not only this, the Department succeeded before the Division Bench of this Court. Therefore, there was some merit in the Department's contention at the time of taking decision of raising demand, which was though ultimately found not legal, but cannot be said to be a forceful recovery from the writ petitioner in the peculiar facts of this case. 18. The judgments, which have been relied upon by the parties, especially the judgment rendered in the case of Tata Refractories Ltd. & Ano. (supra), have already answered one issue that award of interest cannot be confined to the statutory limit of interest and it can be the interest at the rate as ord....
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....orities, etc., may not be utilized by them because of the restriction imposed by the statutory provisions as well as in view of limited power vested in those authorities, such amount are utilized for various welfare purposes also in the best public interest. The Government and such other authorities even, and normally cannot earn interest from the recovered amount. In that situation, the Court may look into the facts of each case for award of interest. At this juncture, we may make it clear that such compensation is quantified upon finding that the Department is liable to pay interest and the date from which the Department is liable to pay interest is also required to be determined first and thereafter interest can be awarded according to the best judgment of the Court, after hearing the parties. Here in this case, the petitioner has made out a case for award of interest from 22-1-1997 and not prior to that because of the reason which we have already mentioned, which we may recapitulate that the respondents themselves have not recovered the amount and the petitioner deposited the amount to take benefit of the interim order. Initially, in the order dated 30th April, 1986, the Court ....
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....e petitioner is entitled to interest @ 15% over Rs. 50 lacs from 22-1-1997 to 12-1-1999." 4.9 In the case of Dr. Poornima Advani & ANR. V/s Government of NCT & ANR. in Civil Appeal No.7643 of 2025. In the said decision the Hon'ble Supreme Court has held as follows:- "25. If on facts of a case, the doctrine of restitution is attracted, interest should follow. Restitution in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order what has been lost to him in execution of decree or order of the Court or in direct consequence of a decree or order. The term "restitution" is used in three senses, firstly, return or restoration of some specific thing to its rightful owner or status, secondly, the compensation for benefits derived from wrong done to another and, thirdly, compensation or reparation for the loss caused to another. 26. In Hari Chand v. State of U.P., 2012 (1) AWC 316, the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. ....
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....ich is but the measure of value, or in actual value otherwise conferred; a recompense in value a recompense given for a thing received recompense for the whole injury suffered remuneration or satisfaction for injury or damage of every description remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly, and proximately caused by at breach of contract or duty; remuneration or wages given to an employee or officer." 29. In the case of Union of India through Director of Income Tax v. Tata Chemicals Ltd., (2014) 6 SCC 335, this Court held that when the collection is illegal, the Revenue is obliged to refund such amount with interest as money so deposited was retained and enjoyed by it. No discrimination can be shown between the assessee and Revenue in paying interest on the refund of tax. Money received and retained without right, carries with it the right to interest. There being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, the Government cannot shrug off its apparent obligation to reimburse the deductors lawful monies w....
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....995 (NT) - Customs dated 26.5.1995 had fixed the rate of interest at fifteen percent for the purpose of Section 27A of the Customs Act. The High Court while awarding interest at the rate of fifteen percent per annum, however, did not refer to such notification; rather, there was no discussion at all as to why the rate of interest on the delayed refund should be fifteen percent. Therefore, at the first glance, the rate of interest awarded by the High Court appeared to be on the higher side and without any reason. 38. Be that as it may, having regard to our discussions made above, we have no hesitation in holding that the respondent was entitled to refund of duty drawback. Appellants had belatedly accepted the said claim and made the refund. Since there was belated refund of the duty drawback to the respondent, it was entitled to interest at the rate which was fixed by the Central Government at the relevant point of time being fifteen percent." 4.11 Thus in terms of the above decisions undisputedly Appellant is entitled to interest on the amounts refunded to him after the dispute was finally determined in their favour by the order of this tribunal. However the interest as....
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.... various judgment relied upon by the Ld. AR particularly the case of Ranbaxy Laboratories Ltd., Kamakshi Tradexim (India) Pvt. Ltd., therefore, the decision of this Tribunal dated 21-11-2017 is distinguished." 4.12 Hon'ble Supreme Court and Delhi High Court decision relevant to the subject are reproduced below: A. Ranbaxy laboratories Ltd. [2011 (273) E.L.T. 3 (S.C.)] "12. Thus, ever since Section 11BB was inserted in the Act with effect from 26th May 1995, the department has maintained a consistent stand about its interpretation. Explaining the intent, import and the manner in which it is to be implemented, the Circulars clearly state that the relevant date in this regard is the expiry of three months from the date of receipt of the application under Section 11B(1) of the Act. 13. We, thus find substance in the contention of learned counsel for the assessee that in fact the issue stands concluded by the decision of this Court in U.P. Twiga Fiber Glass Ltd. (supra). In the said case, while dismissing the special leave petition filed by the revenue and putting its seal of approval on the decision of the Allahabad High Court, this Court had observed as u....
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.... Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. B. In case of Goldy Engineering Works [Order dated 14.07.2023 in WP (C) 4332/2022] observed as follows: "3. For the sake of brevity, the Court deems it apposite to notice the facts as they obtain in the writ petition filed by M/s Goldy Engineering Works vs. Commissioner of Central Excise & Anr.3 On 27 July 2006, a Show Cause Notice4 is stated to have been issued to the petitioner, its proprietor, one M/S Aay Kay Engineering Works and its proprietor, in respect of certain goods which had been seized. The aforesaid SCN was followed by another SCN dated 29 January 2007 in terms of which the Department raised a demand for additional duty as well as proposing penal action again against the noticees for having violated the provisions of an exemption notification. The petitioner asserts that during the pendency of those proceedings, it was also forced to deposit an amount of Rs. 20,00,000. The SCNs were ultimately finalized in terms of the order in original dated 08 February 2008. 4. In terms of the aforesaid order, the Additional Commissioner conf....
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....ection 35, unless the appellant has deposited seven and a half per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the [Principal Commissioner of Central Excise or Commissioner of Central Excise]; (ii) against the decision or order referred to in clause (a) of subsection (1) of Section 35-B, unless the appellant has deposited seven and a half per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of subsection (1) of Section 35-B, unless the appellant has deposited ten per cent of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed Rupees Ten crores: Provided further that the provisions of this section shall no....
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.... appealed against in abeyance. The order of stay would, in any case, be deemed to have never existed once the appeal comes to be dismissed. 25. We further note that the subject of interest on delayed refund which is governed by Section 11BB itself prescribes the starting point for payment of interest on delayed refunds to be the date when an application under Section 11B(1) is received. On a conjoint reading of Sections 11B and 11BB of the 1944 Act, therefore, we come to the irresistible conclusion that interest on delayed refund is clearly dependent upon the making of a formal application as stipulated by Section 11B of the 1944 Act. 26. We also find merit in the contention canvassed by Ms. Narain who had submitted that a refund of duty and interest paid thereon is liable to be viewed as distinct from a predeposit that may be made in compliance with Section 35F of the 1944 Act. The Circular of the Board too strikes an identical position when it is stated that a deposit which is made in compliance with a statutory pre-condition for the preferment of an appeal cannot be viewed as "duty". It is the aforesaid aspect which appears to have weighed with the Board in pro....
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....ondents cannot be permitted to retain moneys which are otherwise not due or are otherwise liable to be returned. The solitary question which stands raised in these matters is the date from which that interest would flow. In Shri Jagdamba Polymers, the High Court on facts had found that the refund was inordinately delayed even though a claim for the same had been promptly lodged. This is clearly evident from Para 7 of the report. The said decision is thus clearly not an authority for the proposition that a refund must automatically follow de hors the requirements of Sections 11B and 11BB. 31. In eBIZ, the Allahabad High Court was not dealing with a claim for refund of "duty" but an amount deposited in the course of investigation. The High Court further went on to hold that even in the absence of a statutory provision if it be found that tax or duty had been wrongly collected, it would be liable to be refunded. There cannot be a dispute with regard to the aforenoted general proposition. What we seek to emphasize here is that in the present case, the issue of refund is duly regulated by two statutory provisions whose prescriptions would necessarily have to be adhered to. Howe....