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TMI BlogAssessee entitled to interest if the Department unjustly holds rightfully earned Cenvat creditX X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee entitled to interest if the Department unjustly holds rightfully earned Cenvat credit - By: - Bimal jain - Cenvat Credit - Dated:- 11-11-2013 - - Dear Professional Colleague, Assessee entitled to interest if the Department unjustly holds rightfully earned Cenvat credit We are sharing with you an important judgement of the Hon ble Gujarat High Court in the case of Hindustan Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ca-Cola Beverages (P.) Ltd. versus Union of India [ 2013 (11) TMI 512 - GUJARAT HIGH COURT ] on following issue: Issue: Whether the assessee is entitled to claim interest if the Department unjustifiably withholds rightfully earned Cenvat credit? Facts Background: M/s. Britco Foods Company Ltd. ( the Amalgamating co. ) merged with M/s Hindustan Coca-Cola Beverages Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. ( the Appellant ) in terms of a scheme of arrangement under Section 391 and 394 of the Companies Act, 1956 duly sanctioned by the High Court of Delhi. An application was made to the Commissioner for transfer of unutilized Cenvat Credit of the Amalgamating co in terms of Rule 10 of the Cenvat Credit Rules, 2004 , which reads as under: 10. Transfer of CENVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it.- (1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory................. However, there was delay in allowing the transfer of the Cenvat credit from the date of application till the date of grant of such credit. The Appellant filed writ petition in which an order was passed directing the Commissioner to allow the transfer of Cenvat Credit. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner allowed transfer of Cenvat Credit but no order was made regarding the claim of interest. The Appellant made a representation to the Commissioner postulating its claim of interest on delay in transferring the Cenvat Credit. In response, the Commissioner issued a show cause notice asking the Appellant to show cause as to why the claim of interest should not be rejected since there was no su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch provision in law. The Appellant replied to the said show cause notice. Thereafter, the Commissioner passed the Order in Original and declined to pay any interest on the premise that there is no statutory provision enabling the Department to pay such interest to the Appellant. The Appellant again filed writ petition before the Hon ble Gujarat High Court wherein the Appellant claimed inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on delayed transfer of credit from the date of application till the date for grant of such Cenvat credit , which was denied by the Department citing absence of any provision in this behalf. Held: It was held by the Hon ble High Court that the Department cannot be permitted to unjustly hold on the Appellant s money without any interest, as it would amount to benefiting the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from its own wrong. The Appellant cited various judgments in support of his contention that even in absence of any statutory provision, interest on refund is automatic and has to be granted on commercial principles. The Hon ble High Court placed reliance on the decision of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. v. CIT [ 2006 (1) TMI 55 - SUPREME Court ] . , whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the Hon'ble Apex Court held that though there was no statutory provision to pay interest on delayed payment of interest but the assessee would be entitled to be compensated by way of interest on interest. Accordingly, the Hon ble Gujarat High Court set aside the order of the Commissioner disentitling the Appellant of the interest amount and directed the Department to pay the same to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us. Thanks Best Regards. Bimal Jain FCA, FCS, LLB, B.Com (Hons) Mobile: +91 9810604563 E-mail: bimaljain at the rate of hotmail.com Released a Book - "Guide to Service Tax Voluntary Compliance Encouragement Scheme, 2013", au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thored by Bimal Jain, FCA, FCS, LLB Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission. - Reply By J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SW SEVERFIELD STRUCTURES LIMITED as = It is really land mark decision given the fact that Department is held responsible accountable for timely action. In the absence of the same, always the assesee's are put into dis-advantageous position. Yogish Rudra Sr.Manager - Indirect Taxation JSW Severfield Structures Ltd., Dated: 13-11-2013 Reply By Pushkar Nanoti as = Sir, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... think the department will go to Supreme Cout. Basically there is no provision. Dated: 10-12-2013 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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