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TMI Blog2013 (11) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of interest under the scheme of the Act is also thoroughly misconceived and misplaced. When the Department acts illegally and not as per the scheme of the Act, the interest on such refund can never be provided for under the Scheme of the Act. If the authorities act as per the law, the question of granting interest on refund can be appreciated and considered as per the scheme of the Act. Contention to the effect that no interest is payable because there is no provision of interest under the scheme of the Act is also thoroughly misconceived and misplaced - Interest on refund is automatic and has to be granted on commercial principles – Reliance has been placed on the judgment of Apex court in the case of Sandvik Asia Ltd. v. Commissioner of Income-tax [2006 (1) TMI 55 - SUPREME Court], wherein the Hon’ble Apex Court even while finding that there was no statutory provision to pay interest on delayed payment of interest, held the assessee entitled to the same on general principles and found that the assessee would be entitled to be compensated by way of interest on interest – Decided in favor of Assessee. - SPECIAL CIVIL APPLICATION NO. 15012 of 2005 - - - Dated:- 2-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the inordinate delay by the Commissioner in transferring the said unutilized MODVAT/CENVAT credit, the Petitioner preferred a writ petition in which an order was passed on 11.09.2002 directing the Commissioner to decide the pending application, expressing a further hope that while deciding the said application, the claim of the petitioner with regard to the interest would also be decided. 2.4 Thereafter, the Commissioner on 09.10.2002, allowed the transfer of MODVAT/CENVAT credit on raw materials but the transfer of MODVAT/CENVAT credit on capital goods was denied on the ground that M/s. Britco Foods Company Ltd. had purportedly wrongly taken credit of capital goods at the stage of initial setting up of the factory and the claim for payment of interest for delay in grant of transfer of credit was rejected. 2.5 The Petitioner was thereafter constrained to file another writ petition challenging the aforesaid letter in which an order was passed on 15.01.2003, directing the Commissioner to revise/reconsider its order dated 09.10.2002. Pursuant to the said order, the Commissioner on 09.04.2003 passed an order allowing the transfer of credit on capital goods amounting to Rs. 4,23,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngful loss caused to the petitioner on account of the conduct of the department. In support of his submissions, learned Senior Advocate for the petitioner relied on the following decisions: i. In the case of D.J. Works v. Deputy Commissioner of Income-tax (1992) 195 ITR 227 (Guj.), it was held that even in cases where there was no specific provision for payment of interest on amounts of interest which had been wrongfully retained, the Act itself recognized in principle the liability of the department to pay interest where excess tax was retained and the Court held that the same principle should be extended to cases where interest was retained. The Court held that once interest becomes due, it takes the same colour as excess amounts of tax and they awarded interest thereon at the rates prescribed under the Act. ii. Reliance was also placed on the decision of the Supreme Court in the case of Sandvik Asia Ltd. v. Commissioner of Income-tax, Pune (2006) 280 ITR 643 (SC) in which it was found that the assessee s money had been unjustifiably withheld by the department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the question of question of applicability of Section 11B of the Act for the purpose of seeking refund of credit availed under the MODVAT Scheme read with the Notifications incorporating Import-Export Policy Q.B.A.L, the Court came to the conclusion that in view of clear language of Clause (c) in the proviso to Sub-section (2), claim for refund based on MODVAT credit is maintainable in accordance with the procedure and limitation prescribed in Sub-section (1) of Section 11B of the Act. vi. In the case of Hello Minerals Water (P) Ltd. vs. Union of India (2004) 174 ELT 422 (All.), it was held that interest is the normal accretion on capital and not a penalty or punishment. Ordinarily, interest should always be awarded whenever any amount is detained or realized by someone, otherwise the person receiving the amount after considerable delay would be losing the entire interest thereon which will be pocketed by the person who managed the delay. 4.1 Learned Senior Advocate for the petitioner submitted that the decision of Sandvik Asia (supra) has been referred to a larger bench in the case of CIT vs. Gujarat Flouro Chemicals (348 ITR 319). Learned Senior Advocate for the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred by Section 11AB of the Central Excise Act, 1944 (1 of 1944), the Central Board of Excise and Customs hereby fixes the rate of interest at thirteen percent per annum for the purpose of the said Section 66/2003-C.E. (N.T.), DATED 12.09.2003. 6 04/01/11 03/31/13 18.00% In exercise of the powers conferred by Section 11AB of the Central Excise Act, 1944 (1 of 1944), the Central Board of Excise and Customs hereby fixes the rate of interest at thirteen percent per annum for the purpose of the said Section 6/2011-C.E. (N.T.), DATED 01.03.2011. 4.2 Learned Senior Advocate for the petitioner submitted that when the Department has acted illegally and ultra virus the Act, an argument that there is no provision for awarding interest under the Act, may not be countenanced. Learned Senior Advocate for the petitioner submitted if the authorities acted as per the law, the question of granting interest on refund can be considered as per the scheme of the Act. Learned Senior Advocate for the petitioner submitted that the refund is always granted as compensation on the ground of equity. 4.3 Learned Senior Advocate for the petitioner submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a statutory provision enabling the department to pay such interest to the petitioner. 5.2 On an application being made for transfer of unutilized credit to the petitioner on merger, the respondents were duty bound to decide the same within reasonable time by either granting permission to transfer the credit, if it was found that the petitioner had committed no irregularities in any of its claims or ought to have initiated proceedings by issuance of show cause notice calling upon the petitioner as to why such permission to transfer the credit to the petitioner should not be rejected. This would have put the petitioner to notice why such delay was being made and would also, as statutorily required, enable him to oppose any such rejection. Admittedly, this was not done. No show cause notice was issued. No adjudication proceedings were initiated. The petitioner was thus compelled to approach this court by filing various SCAs, praying for appropriate relief. The department initially, even refused to grant the transfer of credit raising some technical objections. It was only at the intervention of this Court that the department, ultimately thought it appropriate to grant the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thoroughly misconceived and misplaced. When the Department acts illegally and not as per the scheme of the Act, the interest on such refund can never be provided for under the Scheme of the Act. If the authorities act as per the law, the question of granting interest on refund can be appreciated and considered as per the scheme of the Act. 6. Learned Senior Advocate for the petitioner 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 Court finds force in the contentions of the learned Senior Advocate for the petitioner. The learned counsel has placed reliance on the decision of the Hon ble Supreme Court in the case of Sandvik Asia Ltd. v. Commissioner of Income-tax, Pune (supra), wherein the Hon ble Apex Court even while finding that there was no statutory provision to pay interest on delayed payment of interest, held the assessee entitled to the same on general principles and found that the assessee would be entitled to be compensated by way of interest on interest. It was further pointed out by the learned Senior Advocate for the petitioner th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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