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TMI Blog2014 (6) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, clearly suggests that so far as levy of additional duty of excise on tea is concerned, no provision is made applicable to the levy relating to payment of interest for its delayed / short / non-payment. To put it differently, firstly, there is no provision made to levy/ charge interest in the Finance Act, 2003: secondly, substantive provision relating to levy/ charging of interest from Central Excise Act is not made applicable to Finance Act, 2003 and thirdly, by virtue of Section 157(3), only provisions relating to penalty, refund and exemption contained in Central Excise Act are made applicable to Finance Act, 2003. Revenue may have power to charge interest from the assessee for non-payment/ short payment/ delayed payment of “excise duty” on the excisable goods but there is a distinction between “ additional duty of excise” and “ excise duty”. The former is paid under the Finance Act 2003 whereas the later is paid under the Central Excise Act. Since the Finance Act, 2003, does not contain any substantive provision to charge interest, a fortiorari - no demand for interest could be raised for non-payment/ short payment/ delayed payment of additional excise duty under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of Rs. one per Kg . Section 157 ( 1 ) of the Finance Act provided that there shall be levied and collected for the purpose of the Union , by surcharge, an additional duty of excise at the rate specified in the schedule. Sub Section ( 2 ) provided that the additional excise duty payable under sub section ( 1 ) would be in addition to any other duties of excise chargeable on such goods under the Central Excise Act at the rates specified in the Schedule appended to the Act. Sub Section (3) provided that the provisions of Central Excise Act and the Rules made there under including those relating to refunds, exemptions from payment of duties and imposition of penalty, shall as far as may be, apply in relation to collection of additional duty of excise levy able under this Section. The fourth schedule of the Act was accordingly amended. Section 157 and the fourth schedule read as under:- 157. Additional duty of excise (tea and tea waste). - (1) In the case of goods specified in the Fourth Schedule, being goods manufactured in India, there shall be levied and collected for the purposes of the Union, by surcharge, an additional duty of excise, at the rate specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Borpujari, learned counsel for the petitioner and Mr. D.C. Chakraborty, learned Central Govt. Counsel for the respondents. Shri K.N Choudhury, learned senior counsel while assailing the impugned demand of interest, contended that it was without jurisdiction for want of authority in law. Elaborating his submission, learned counsel contended that liability to pay /recover /demand /levy interest arises only when there is a substantive law made by Parliament/State to that effect. According to him, unless Revenue was able to show the specific authority which empowers them to charge the interest, no interest could be demanded from the assessee for the delayed payment of additional duty of excise. Learned senior counsel pointed out that Finance Act of 2003 only empowered the Revenue to charge additional duty of excise on tea by virtue of Section 157 ( 1 ) and further empowered to recover and if not paid or less paid by taking recourse to the provisions of Central Excise Act . He pointed out that in the absence of any charging Section to levy interest in the Finance Act 2003, no demand for interest could be raised by the Revenue. Learned senior counsel pointed out that Section 157(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection or tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney v. IRC, CIT v. Mahaliram Ramjidas, India United Mills Ltd. v. Commissioner of Excess Profits Ta, Bombay and Gursahai Saigal v. CIT, Punjab). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of dam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Gauhati High Court questioning its legality and correctness. There was, however, a difference of opinion between the two learned judges of the Division Bench on the issue arising in the petition and therefore, the matter was referred to the third judge by formulating 4 questions. One of the questions which was referred to the third judge for his decision was - Whether Section 9 ( 2 ) of the CST Act visualize any payment of interest ? The third judge answered the question in affirmative and held that demand raised by the department for interest was justified. It was, accordingly, upheld which resulted in dismissal of assessee s writ petition. The assessee being aggrieved, appealed to the Supreme Court. The Supreme Court applied the principal of law laid down by the Constitution Bench in the case of J.K.Syenthetics (supra). Justice Bharucha (as his Lordship then was and later CJI), speaking for the bench in Para 7 explained the legal position emanating from the Constitution Bench decision as under. 7. This proposition may be derived from the above : interst can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sales tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central sales tax the States sales tax authorities cannot, for the purpose of collecting and enforcing payment of Central sales tax, charge interest thereon. 14. The requirement of the 1st respondent s sales tax authorities that the appellant should pay interest at the rate of 24% p.a. on delayed payment of Central sales tax under the provisions of Section 35-A of the State Act must, therefore, be held to be bad in law. Coming now to the facts of this case, when we examine the provisions of Finance Act 2003 keeping in view the aforesaid principle of law, then we find that there is no substantive provision contained in the Finance Act 2003 to charge/levy interest on delayed payment of additional excise duty payable under Section 157 ( 1 ) ibid. In our view, the liability to pay additional duty of excise on tea is created for the first time by Section 157 ( 1 ) )of the Finance Act 2003. However, the Finance Act of 2003 does not contain any substantive provision to charge/levy interest from the assessee in case if payment of additional duty of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty because it is paid under the Central Excise Act which contains a specific substantive provision to charge the interest. If the intention of legislature was to levy interest also on non-payment/short payment of additional duty of excise then, it would have made separate specific substantive provision in the Finance Act, 2003 itself. However, it was not done. Learned counsel for the respondent was not able to point out any significant distinguishing feature from the law laid down by Supreme Court in the case of India Carbon Ltd., which would persuade this Court to sustain the impugned demand. In the light of foregoing discussion, we hold that impugned demand raised by respondent is without jurisdiction as it was issued by the department without there being any substantive provision to levy/charge interest in the Finance Act, 2003. It is therefore not legally sustainable and has to be quashed. In view of foregoing discussion, the writ petition succeeds and is allowed. The impugned demand dated 27.4.2005 issued by the respondent No.7 (Annexure- 4) is quashed by issuance of writ of certiorari. As a result, if the petitioner is found to have paid any amount pursuant to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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