TaxTMI 
TaxTMI 
2025 (5) TMI 2239
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....refund application was filed by the appellant on 17.05.2021 and refund has been allowed to them by the adjudicating authority on 16.08.2021 Accordingly, I conclude that since the adjudicating authority had granted refund of said pre-deposit amount within 03 months, no interest is payable to the appellant in view of the said Section 35FF of the Act. 14. In view of the aforesaid discussion and findings, I hereby dispose off the present appeal by allowing the interest to the appellant on the rate specified under Section 11BB on the amount of Rs. 26,06,282/- for the period from 01.07.2008 till 31.10.2012." 2.1 By show cause notice dated 07.06.2010, demand of Service Tax for an amount of Rs 86,22,724/- was made and appropriation of amount of Rs 26,06,282/- deposited vide TR-6 Challan No 26 dated 01.07.2008 during the course of investigation was proposed. 2.2 The show cause notice was adjudicated confirming the demand along with interest and penalties as per the provisions of Finance Act, 1994 by order in original dated 23.01.2012. 2.3 Appellant challenged the order dated 23.01.2012 before CESTAT and he was directed by Stay Order No 1197/2012 dated 31.10.2012 to deposit....
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....d against payment of predeposit for filing the appeal and not against the deposit made under protest. ⮚ It is a settled position in law that interest is compensatory in nature and should have been paid from the date of deposit. Reliance is placed upon the following decisions:- ○ Parle Agro Pvt Ltd. [Final Order No 70180-70181/2021 dated 25.05.2021] ○ Emmar Mgf Construction Pvt Ltd. [Final Order No 51873/2021 dated 07.10.2021 in Service Tax Appeal No 50992/20200] ○ Parle Agro Pvt. Ltd. [Final Order No 70145/2017 dated 31.01.2017 in Central Excise Appeal No 2843/2006] ○ Alliance Francaise De Delhi [Final Order No 50075/2025 dated 22.01.2025 in Service Tax Appeal No.51865 of 2024 (SM)] ○ Pratibha Processors [1996 (88) E.L.T. 12 (S.C.)] ○ EBIZ.COM PVT. LTD. [2017 (49) S.T.R. 389 (All.)] 3.3 Authorized Representative reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order alongwith the submissions made in the appeal and during the course of argument. 4.2 The impugned order for denying the claim of interest records as follows:- ....
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....n in as much as that the demand in question was initially confirmed only on 23.01.2012 and stay order was passed by the Hon'ble CESTAT on 31.10.2012. Therefore conclude that for the period 1.7.2008 to 31.10.2012, the said amount can not be termed as pre-deposit and the adjudicating authority has erred to consider the said amount as pre-deposit for the said period 9. However, irrespective of aforesaid, I also observe that as soon as the said stay order dated 31.10.2012 was passed by the Hon'ble CESTAT the said amount of Rs. 26,06,282/- took the colour of pre-deposit under said Section 35F along with the amount of Rs. 14,00,000/- which was additionally deposited by the appellant vide challan dated 22.11.2012 in compliance of said stay order dated 31.10.2012. 10. Having concluded so, I now turn my attention to the interest required to be paid to the appellant. In this regard I observe that during period from 21.01.2008 (i.e. the date on which the appellant had deposited amount of Rs 26,06,282/-) till 31.10.2012 (i.e. the date on which the stay order was passed by the Hon'ble CESTAT), the said amount remained the amount paid by the appellant during investi....
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....11. In the instant case, I find that the ratio of the above verdicts of the Hon'ble Supreme Court/High Court/Tribunal is squarely applicable to the instant case and as the impugned amount was retained by the department for such long period without authority of law, interest is payable on entire amount of refund, at the rate prescribed in Section 11BB of the CE Act 1944 from 01.07.2008 to 31.10.2012 12. Now the next question arises, what about the interest on the said amount of Rs. 26,06,282/- as well as on the amount of Rs. Twelve Lacs deposited by the appellant on 22.11.2012 in compliance of the stay order dated 31.10.2012 of the Hon'ble Tribunal. I find that it is on records that the said amount of Rs. Twelve lacs was deposited by the appellant as pre-deposit under Section 35F. Furthermore, I have already observed supra that the said amount of Rs. 26,06,282/- had also attained identity as pre-deposit as soon as the said stay order was passed. In this regard, I observe that prior to 6.8.2014 and after 6.8.2014, Section 35FF of the Act which deals with the interest on pre-deposit reads as under:- "Section 35FF. Interest on delayed refund of amount deposite....
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....ation 3. Heard both sides and perused the records. 4. We have gone through the pleadings of the appellant and also observation in para 5 of the adjudication order. It appears that the adjudication order is not cryptic but reasoned and speaking. The authority was handicapped to consider the claim of the appellant without respective evidence before him. No copies of contracts were made available to him nor reconciliation of figures appearing in two statements were placed before him. Of course these are matters of record on fact which can be gone into in detail while the appeal is heard. 5. Keeping in view the above observations and quantum of deposit already made, there shall be a further deposit of Rs. 14 lakhs (Rupees Fourteen lakhs) within 8 weeks from today and compliance to be made on 10.1.2013. Subject to such deposit, pre-deposit of balance dues shall be waived during the pendency of the appeal or six months period whichever is earlier." From the above it is evident that tribunal has in the above order considered the entire amount, to be a deposit made under Section 35F of the Central Excise Act, 1944 for hearing the appeal. Thus the finding in th....
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....ispensing with the pre-deposit of duty demanded or penalty levied. The provisions of Section 35 F as it stood prior to 6.8.2014 reads as under:- ― 35F: Deposit, pending appeal of duty demanded or penalty levied. --- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of central excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied: Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demand....
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....ax, Udaipur18 where the Bench had dealt with similar contentions as raised by the appellant herein referring to the earlier decisions of the Madras High Court in Commissioner of Central Excise, Coimbatore vs. Pricol Ltd which was subsequently followed by the Allahabad High Court in Ebiz.com vs. Commissioner of Central Excise, Customs and Service Tax and ors. and subsequently in Commissioner of Central Excise, Lucknow Vs. Eveready India Ltd. In all these decisions, the main principle laid down is that any amount deposited during the pendency of adjudication or investigation is in the nature of deposit and therefore, cannot be considered to be towards payment of duty and consequently the principles of unjust enrichment would not apply in the event of claiming refund of such deposit. The decision in Chambal Fertilizers being rendered by Principal Bench and being latest in point of time is binding on us and we, therefore, hold the issue on merits in favour of the appellant." 8. Learned counsel for the appellant in support of her submissions that the time limit provided under Section 11B is not applicable to the cases of refund of pre-deposit under Section 35F has relied on the....
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.... provisions of Section 11 AA, 11 BB and 11 DD of the Act providing the interest rate from 6% to 15% and accordingly increased the rate of interest from 6% to 12% per annum. Following the said decision, the grant of interest at 12% per annum on the refund amount is appropriate." 10. In view of the settled principles of law, the impugned order is unsustainable and is hereby set aside. The department is directed to refund the amount deposited by the appellant on 19.12.2013 alongwith interest at the rate of 12% per annum. The appeal is accordingly allowed with consequential benefit." 4.5 Further following decisions have been brought to my knowledge where in following has been observed: A. Chandigarh Bench of the Tribunal in the case of Riba Textile Ltd. V/s Commissioner of CE & ST, Panchkula reported at 2020 (2) TMI 602 - CESTAT Chandigarh and M/s Marshal Foundry & Engg. Pvt. Ltd. V/s Commissioner of CGST, Faridabad 2019 (11) TMI 1269:- "6. On going through the decision cited by learned A.R. in the case of M/s Juhu Beach Resort Ltd (supra), I find that in the said case, the decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd 3 Excise Appeal No. ....
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....on 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 the appellant interest at the rate specified in section 11BB after the expiry of three months from the date of communication of the order of the appellate authority, till the date of refund of such amount." 17. On-going through the provisions of both Income Tax Act, 1961 and Central Excise Act, 1944, the interest on delayed refund is payable after expiry of 3 months from the date of granting refund or from the date of communication of order of the appellate authority, which are parimateria. Therefore, the decision of Hon'ble Apex Court in the case of Sandvik Asia Ltd. (supra) is law of land, in terms of Article 14 of the Constitution of India which is to be followed by me, wherein the Hon'ble Apex has observed as under:- "45. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was ....
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....dition 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 or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which 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; 6 Excise Appeal No. 60446 of 2018 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 a breach of contract or duty; remuneration or wages given to an employee or officer." 47. There cannot be any doubt that the award of interest on the r....
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.... 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:- "14. Now, the sole question remains to be considered is what is the nature of interest that the petitioner is entitled to get. As discussed above in the judgment Commissioner of Central Excise v. ITC (supra), the Apex Court confined the interest to 12% and further held that any judgment/decision of any High Court taking contrary view, will be no longer good law. The said judgment is rendered, in my considered opinion under similar circumstances. So also in Kuil Fire Works Industries v. Collector of Central of Excise [1997 (95) E.L.T. 3 (S.C.), the pre-deposit made by the assessee was directed to be returned to him with 12% interest. I have also come across the judgment of the Calcutta High Court in Madura Coats Pvt. Ltd. v. Commissioner of C. Ex., Kolkata-IV [2012 (285) E.L.T. 188 (Cal.), wherein the peremptory directions of the Apex Court in the judgment of ....
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....ty 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 respect of pre deposit. I find that in the decisions cited by the learned advocate, interest at 12% has been allowed. Therefore, following the judicial discipline, I consider it appropriate that interest in this case also is to be allowed @ 12%. Accordingly, original adjudicating authority is directed to workout the differential interest amount and make the payment to the appellants." 21. As the provisions of section 243 Income Tax Act, 1961 and section 35FF of Central Excise Act, 1944, are parimateria. Therefore, following the decision of Hon‟ble Apex Court in the case of Sandvik Asia Ltd. (supra) and Sony Pictures Networks India Pvt.Ltd. (supra) I hold that the appellants are entitled to claim interest from the date of payment of initial amount till the date its refund @ 12% per annum." 7. As this Tribunal has examined the issue in detai....
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.... 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. 5/2011-Central Excise (N.T.), dated the 1st March, 2011 published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide, number GSR 136(E), dated the 1st March, 2011, except as respects things done or omitted to be done before such supersession, the Central Government hereby fixes the rate of interest at fifteen per cent per annum for the purpose of the said section. 2. This notification shall come into force from the 1st day of April, 2016. 36. The Notification issued under Section 11BB provides interest at the rate of six per cent per annum. It is reproduced below : Notification No. 67/2003-C.E. (N.T.), dated 12-9-2003 Notification Under Section 11BB Interest @ 6% per annum on delayed refunds. - In exercise of the powers conferred by section 11BB 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. 17/2002-Central Excise (N.T.), date....
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....the stay application. 41. In view for the aforesaid decisions, and the fact that the rate of interest varies from 6% to 18% in the aforesaid Notifications issued under Sections 11AA, 11BB, 11DD and 11AB of the Excise Act, the grant of interest @ 12% per annum seems to be appropriate." C. Continental Engines Pvt Ltd. [2022 (382) ELT 522 (T-Del)] "7. A perusal makes it clear that the amount of pre-deposit is to be refunded along with the interest which was not below 5% and shall not exceed 36%. No concept of any time-limit is being mentioned in the said provision. Hon'ble Apex Court also has settled this issue in the case of Sandvik Asia Ltd. reported as 2006 (196) E.L.T. 257 (S.C.) holding the assessee entitled for interest along with the refund of the amount which he was not liable to pay to the Department. 8. I also endorse the following findings of the Tribunal in the case of M/s. Parle Agro Pvt. Ltd. reported as 2021-TIOL-306CESTAT-ALL = 2022 (380) E.L.T. 219 (Tri. - All.) as under : "30. ..... 31. Section 11D of the Excise Act deals with duties of excise collected from the buyer to be deposited with Central Government. It pr....
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....es out of Special Civil Application No. 18591 of 2018 filed by M/s. Willowood Chemicals Pvt. Ltd. submitting that said Writ Petitioner was entitled on the basis of Section 16 of the IGST Act read with Section 54 of the CGST Act for compensation in receipt of delayed payment as detailed in Annexure D of the petition, which in turn dealt with 12 refunds with delay ranging between 94 to 290 days. The special civil application had thus prayed for appropriate compensation. 5. In both the petitions it was submitted that inaction leading to inordinate delay in granting refunds was per se arbitrary and that the inordinate delay impacted the working capacity of the Writ Petitioners thereby reducing their ability to conduct business and as such appropriate compensation ought to be awarded along with interest for delay. The submissions were opposed by the Learned Counsel appearing for the Revenue. 6. The High Court considered the rival submissions in light of the statutory provisions and relied upon certain decisions including the decision of this Court in K.T. Plantation Pvt. Ltd. and Anr. v. State of Karnataka [(2011) 9 SCC 1], Sandvik Asia Ltd. v. Commissioner of....
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....ate the aggregate refund, the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR-38. The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards interest. Let this exercise be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The requisite amount towards the interest shall be paid to the writ applicants within a period of two months from the date of receipt of the writ of this order." 8. The appellant being aggrieved, preferred Review Petitions in both the cases. It was submitted inter alia : "4. It is respectfully submitted that this Hon'ble Court has directed the respondent authority to pay simple interest on the delayed payment at the rate of 9% per annum from the date of filing of the GSTR-3B. 5. It is respectfully submitted that as per section 56 of the IGST Net Interest at the rate of not exceeding six percent may be given whereas by order dated 10-7-2011 this Hon'ble Court was pleased to give interest at the rate of 9%." By separate orders dated 13-3-2020 passed in both the cases, the Review Petitions....
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.... order directing the refund of amount illegally realised, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment orders on the ground of their illegality or unconstitutionality and, therefore, could take action under Article 226 for the protection of their fundamental right, and the courts, on setting aside the assessment orders, exercised their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realised. We do not find any good reason to extend this principle and, therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right." 7. The Court has emphasised that there was no legal right in the appellant who had filed the writ petition to claim the refund under the relevant statute. 8. In the present case also till the insertion of Section 27A in the Act by Act 22 of 1995 there was no right entitling payment of interest on de....
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....eference to the nature of the claim made therein. The decision in Suganmal [AIR 1965 SC 1740] has been explained and distinguished in several subsequent cases, including in U.P. Pollution Control Board v. Kanoria Industrial Ltd. [(2001) 2 SCC 549] and ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [(2004) 3 SCC 553] The legal position becomes clear when the decision in Suganmal [AIR 1965 SC 1740] is read with the other decisions of this Court on the issue, referred to below : (i) Normally, a petition under Article 226 of the Constitution of India will not be entertained to enforce a civil liability arising out of a breach of a contract or a tort to pay an amount of money due to the claimants. The aggrieved party will have to agitate the question in a civil suit. But an order for payment of money may be made in a writ proceeding, in enforcement of statutory functions of the State or its officers. (Vide Burmah Construction Co. v. State of Orissa [AIR 1962 SC 1320 : 1962 Supp (1) SCR 242]). (ii) If a right has been infringed - whether a fundamental right or a statutory right - and the aggrieved party comes to the Court for enforcement of the r....
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....epending on facts and circumstances of a given case. (Vide U.P. Pollution Control Board v. Kanoria Industrial Ltd. [(2001) 2 SCC 549]) (vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the State or its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. (Vide Sanjana M. Wig v. Hindustan Petroleum Corporation Ltd. (2005) 8 SCC 242) We are therefore of the view that reliance upon Suganmal was misplaced to hold that the writ petition filed by the appellant was not maintainable." 16. We, therefore, proceed to consider the merits. Turning to the basic question it must be noted that in the following cases, this Court dealt with the question as to payment of interest on the amount due by way of refund : (A) In Modi Industries Ltd. and Another v. Commissioner of Income Tax and Another [(1995) 6 SCC 396] a Bench of three Judges of this Court was called upon to consider the effect of Section 214 of the Income-tax Act, 1961, and the questions which arose were set out as under : "We shall now indicate how the cont....
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....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 appellate order. Therefore, interpretation of Section 214 or any other section of the Act should not be made on the assumption that interest has to be paid whenever an amount which has been retained by the tax authority in exercise of statutory power becomes refundable as a result of any subsequent proceeding. (Emphasis supplied) (B) In Godavari Sugar Mills Ltd., a Bench of two Judges of this Court considered the question whether interest on the compensation amount at the rate of 9 per cent per annum could be awarded when the terms of Section 6 of the Maharashtra Agriculture Lands (Ceiling of Holdings) Act, 1961 pre....
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....the Act provides for determination of compensation and apportionment thereof. Section 26 deals with mode of payment of amount of compensation and the same is extracted below : "26. Mode of payment of amount of compensation. - (1) The amount of compensation may, subject to the provisions of sub-section (3), be payable in transferable bonds carrying interest at three per cent per annum. (2) The bonds shall be - (a) of the following denominations, namely - Rs. 50; Rs. 100; Rs. 200; Rs. 500; Rs. 1000; Rs. 5000 and Rs. 10,000; and (b) of two classes - one being repayable during a period of twenty years from the date of issue by equated annual instalment of principal and interest, and the other being redeemable at par at the end of a period of twenty years from the date of issue. It shall be at the option of the person receiving compensation to choose payment in one or other class of bonds, or partly in one class and partly in another. (3) Where the amount of compensation or any part thereof, cannot be paid in the aforesaid denomination, it may be paid in cash." (Emphasis supplied) The said section contemplates the payment of compensa....
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....ration before a Bench of three Judges of this Court, and the matter was considered thus : "3. In order to answer the aforesaid issue before us, we have carefully gone through the judgment of this Court in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] and the order of reference. We have also considered the submissions made by the parties to the lis. 4. We would first throw light on the reasoning and the decision of this Court on the core issue in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508]. The only issue formulated by this Court for its consideration and decision was whether an assessee is entitled to be compensated by the Income Tax Department for the delay in paying interest on the refunded amount admittedly due to the assessee. This Court in the facts of the said case had noticed that there was delay of various periods, ranging from 12 to 17 years, in such payment by the Revenue. This Court had further referred to the several decisions which were brought to its notice and also referred to the relevant provisions of the Act which provide for refunds to be made by the Revenue when a superior forum directs refund of certain amounts to an ....
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....structure of the Constitution in so far as they conferred power on the executive government for withdrawal of exception without hearing and without reasons and whether the provisions of the Acquisition Act were protected by Article 31(A) of the Constitution and whether they were violative of Article 300(A) of the Constitution?" After dealing with these questions, the reference was answered thus : We, therefore, answer the reference as follows : (a) Section 110 of the Land Reforms Act and the Notification dated 8-3-1994 are valid, and there is no excessive delegation of legislative power on the State Government. (b) Non-laying of the Notification dated 8-3-1994 under Section 140 of the Land Reforms Act before the State Legislature is a curable defect and it will not affect the validity of the notification or action taken thereunder. (c) The Acquisition Act is protected by Article 31A of the Constitution after having obtained the assent of the President and hence immune from challenge under Article 14 or 19 of the Constitution. (d) There is no repugnancy between the provisions of the Land Acquisition Act, 1894 and the Rocrich and ....
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....ions made by this Court in Paragraph 48 of the decision are quite clear that "the award of interest in refund and amount must be as per the statutory provisions of law and whenever a specific provision has been made under the statute such provision has to govern the field." The subsequent decision of the Bench of three Judges in Gujarat Fluoro Chemicals noticed that the grant of interest at the rate of 9 per cent was in the facts of the case in Sandvik Asia Ltd. 19. Since the delay in the instant case was in the region of 94 to 290 days and not so inordinate as was the case in Sandvik Asia Ltd., the matter has to be seen purely in the light of the concerned statutory provisions. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at the rate of 6 per cent. The award of interest at 9 per cent would be attracted only if the matter was covered by the proviso to the said Section 56. The High Court was in error in awarding interest at the rate exceeding 6 per cent in the instant matters." 4.7 From the above decision of the Hon'ble Supreme court it is evident that when the statute is silent about the interest to be paid on deposits made....
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....Court by filing Civil Appeal No. 2796/1986, wherein Hon'ble Supreme Court modified the order and permitted the petitioner to deposit Rs. 50 lacs in two instalments on or before given dates and permitted the petitioner to furnish bank guarantee of Rs. 50 lacs. In the above orders of the High Court and of Hon'ble Supreme Court, there is no condition of payment of interest over Rs. 50 lacs which was deposited by the writ petitioner. Therefore, in case in hand the Department did not recover the amount of Rs. 50 lacs from the petitioner but it was deposited by the petitioner in terms of the order passed by the Court and the Department accepted the said amount because of the order passed by this Court and Supreme Court. Thereafter the writ petition of the petitioner was allowed, vide judgment dated 19th August, 1988. Union of India, Revenue, challenged the judgment of the learned Single Judge dated 19th August, 1988, in L.P.A. No. 71/1988R, wherein interim order dated 7th February, 1989, was passed, which we have already referred above and the Division Bench stayed the judgment of the learned Single Judge dated 19th August, 1988, with the condition that the Department will refund the dep....
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....mount in view of the interim order. However, the interim order dated 7th February, 1989 has put a condition upon the Department that in case appellant, Union of India/Department, fails in appeal, then they will refund the amount with 15% interest. However, the Department succeeded in L.P.A. No. 71/1988R and the writ petition of the petitioner was dismissed. Therefore, after dismissal of the writ petition of the petitioner by the judgment passed in L.P.A. No. 71/1988R, the Department was not supposed to refund the amount as well as was not liable to pay interest over that amount. 16. Hon'ble Supreme Court, in writ petitioner's Civil Appeal No. 1460/1990, set aside the judgment of the Division Bench of this Court dated 15-4-1989, vide judgment dated 22nd January, 1997. Therefore, after 22-1-1997, the respondents were under legal obligation to repay the deposited amount forthwith, which the respondents did not do and therefore, retained the money illegally from 22-11997. So far as interest from 22-1-1997 is concerned, the petitioner is certainly entitled to interest over the deposited amount. 17. However, in the above facts of the case, when the petitioner deposited ....
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....deprives other from his property (money), is liable to refund the property/money with reasonable compensation. When it is a matter of illegal recovery and consequent retention of money, which is not governed by the statutory award of interest and is not be governed by contractual obligation of interest, then in that situation the Court determines the rate of interest, which can be just and equitable compensation for the person who has been deprived of his property/money and in that situation, it is called damages for illegal retention of money. Such legal damages on account of illegal retention of money is normally quantified by adopting the reasonable rate of levy of interest, which ordinarily one would have got, had he retained the money and invested the same for his own use. Such type of award of damages equal to the interest is well recognized as an award of compensation to the aggrieved. However, we are of the considered opinion that such general principles blanked cannot be applied to the cases where Government or Revenue authority without any mala fide or oblique motive raises demand and recovers money from the citizens, which is not found to be by colourable exercise of pow....
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....o. 1460/1990 before the Hon'ble Supreme Court, no prayer was made by the petitioner for award of interest over the deposited amount and therefore, no such relief was granted by Hon'ble Supreme Court in the petitioner's Civil Appeal No. 1460/1990. Therefore, claim of the writ petitioner for interest over the amount deposited by it from the date of its deposit cannot be justified in the facts of this case referred above, nor the petitioner can claim the benefit of the condition imposed by the Division Bench of this Court in L.P.A. because that order has merged in the final order passed by the Division Bench and the respondent- Union of India did not fail in the appeal. Therefore, it was for the writ petitioner to seek relief of award of interest from the Supreme Court in Civil Appeal from the date of deposit or from the date of judgment of Single Bench, i.e. prior to decision by Supreme Court, and that has not been prayed by the writ petitioner, which may be for obvious reason that the deposits were made to take benefit of the interim order by the petitioner. 19. In view of the above reasons, we are of the considered opinion that the writ petitioner is entitled to interest f....
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....003) 8 SCC 648. This Court explained the principles of restitution in the case of O.N.G.C. Ltd. (supra) as under:- "Appellant is a public sector undertaking. Respondent is the Central Government. We agree that in principle as also in equity the appellant is entitled to interest on the amount deposited on application of principle of restitution. In the facts and circumstances of this case and particularly having regard to the fact that the amount paid by the appellant has already been refunded, we direct that the amount deposited by the appellant shall carry interest at the rate of 6% per annum. Reference in this connection may be made to Pure Helium Indian (P) Ltd. v. Oil & Natural Gas Commission, JT 2003 (Suppl. 2) SC 596 and Mcdermott International Inc. v. Burn Standard Co. Ltd. JT 2006 (11) SC 376." (Emphasis supplied) COMPENSATION: 28. 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 whose acts or omissions have caused loss or injury to another in order that t....
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....Customs (Pre.), Lucknow in Customs Appeal No.70540 of 2024 having Final Order No.70092 of 2025 dated 27.02.2025. The relevant paras are reproduced below:- "35. It was, therefore, not correct on the part of the appellants to contend that there was no provision for payment of interest on delayed refund of duty drawback. That apart, it is wholly untenable for the appellants to contend that refund of duty drawback was granted to the respondent as a concession, not to be treated as a precedent. As we have seen, respondent is entitled to refund of duty drawback as a deemed export under the Duty Drawback Scheme. The applications for refund were made in 1996. Decision to grant refund of duty drawback was taken belatedly on 07.10.2002 whereafter the payments were made by way of cheques on 31.03.2003 and 20.05.2003. Admittedly, there was considerable delay in refund of duty drawback. 36. As we have already examined, under sub-section (1) of Section 75A of the Customs Act, where duty drawback is not paid within a period of three months from the date of filing of claim, the claimant would be entitled to interest in addition to the amount of drawback. This section provides tha....
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....ows: "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 the appellant interest at the rate specified in section 11BB after the expiry of three months from the date of communication of the order of the appellate authority, till the date of refund of such amount." 4.11 Hon'ble Supreme Court has in case of Ranbaxy laboratories Ltd. [2011 (273) E.L.T. 3 (S.C.)] held as under:- "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 ....
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....g for refund, was filed before the Assistant Commissioner on 12th January 2004, the Court directed payment of Statutory interest under the said Section from 12th April 2004 i.e. after the expiry of a period of three months from the date of receipt of the application. Thus, the said decision is of no avail to the revenue. 15. In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under 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. 4.12 In case of Goldy Engineering Works [2023 (10) CENTAX 189 (Del)] Hon'ble Delhi High Court has observed as follows in respect of the decisions granting the interest in any manner other than as prescribed by the statute: "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 sta....
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....ed hereinbelow: - "Section 11-B. Claim for refund of [duty and interest, if any, paid on such duty].- .... Section 11-BB. Interest on delayed refunds.- ... 22. It would also be pertinent to notice Sections 35F and 35FF in order to highlight the distinction between the statutory scheme underlying refund of duty and the return of a pre-deposit made in connection with an appeal that may be preferred. Those two provisions are extracted hereinbelow: - "Section 35-F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.-The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal- (i) under sub-section (1) of Section 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, unles....
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....etitioner appears to have made an application for refund ultimately and only after the departmental appeal before the CESTAT came to be dismissed. 24. We deem it apposite to observe that the mere pendency of an appeal or an order of stay that may operate thereon would not detract from the obligation of any person claiming a refund making an application as contemplated under Section 11B(1) within the period prescribed and computed with reference to the "relevant date". We do so observe in light of the indubitable principle that an order of stay that may operate in an appeal does not efface the demand or the obligation of refund that may have sprung into existence. It merely places the enforcement of the order 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, ....
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....nt that declaration, any refund that may be made would itself amount to the assessee being unjustly enriched. The making of an application and a declaration to the aforesaid effect is thus not merely an empty formality. This too appears to reinforce the imperatives of an application being formally made before a claim for refund is considered. 30. That only leaves the Court to consider the decisions which were cited by Mr. Mishra for our consideration. However, before proceeding to do so, we deem it pertinent to enter the following prefatory observations. A levy of interest on refund must undoubtedly follow where it is found that the amount has been unjustifiably retained or remitted with undue delay. The respondents 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....