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TMI Blog2015 (3) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law:- Whether the Tribunal has erred in holding that dealer is entitled to interest under Section 54(1)(aa) on refund arising from appellate order? 2. The facts are that the assessment and demand was made of ₹ 1,66,286/- by the Assessing Officer, which included interest and penalty. In appeal, the Appellate Authority found that there would not be any demand, but ₹ 5,26,577/- by way of refund of tax would be available to the Assessee and the appeal was allowed. As no interest was awarded by the Appellate Authority, the Assessee preferred further appeal before the Tribunal and the Tribunal, for the reasons recorded in the order, found that the interest would be available to the Assessee on the amount of refund, which has resulted pursuant to the order of the first Appellate Authority. Under these circumstances, the State has preferred the present appeal. 3. We have heard Mr.Dave, learned AGP for the Revenue and Mr.Mehta, learned Counsel for the Assessee, who has appeared upon advance copy. 4. As such, in our view, the question, which is raised by the Revenue in the present appeal, is already covered by the decision of this Court in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. One may say that the consequence in law would be the assessment made by the first authority and further modified by the first Appellate Authority and further modified by the second Appellate Authority or the third Appellate Authority as the case may be but, the ultimate determination of assessment is made by the Appellate Authority in appeal. Under these circumstances, it cannot be said that while giving effect to Section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first Appellate Authority or thereafter, the second Appellate Authority or even third Appellate Authority as the case may be. The interpretation canvassed by the Revenue of Section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of doctrine of merger which is well accepted doctrine incorporated in the system of administration of justice. 11. Apart from the above, it may also result into discriminatory treatment to the extent that one, who succeeds in the assessment and is entitled to the refund, would get interest on refund but the one, who has carried the matter in appeal and be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensated for the inordinate delay in receiving monies properly due to it, has observed from paragraphs 75 to 81 thus:- Whether on general principles the assessee ought to have been compensated for the inordinate delay in receiving monies properly due to it? Learned counsel for the appellant says that it cannot be denied that it has been deprived of the use of it's monies for periods ranging from 12 to 17 years. It also cannot be denied that such deprivation is solely due to the actions of the revenue which have been held by this Court to be contrary to the provisions of the Act, on general principles it ought to be compensated for such deprivation. In the impugned order, the Bombay High Court has held that no compensation is required to be paid since ... there was a serious dispute between the parties, which was ultimately ordered to be paid pursuant to the order passed by this Court on 30.04.1997. Undisputedly, the amount pursuant thereto was paid on 27.03.1998. ... The Court further held that since the amount was paid once the controversy was resolved there was no wrongful retention of monies. No authority can ever accept an obligation to make payment and simply refuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of its earlier judgment in the case of Suvidhe Ltd. and Mahavir Aluminium that the law relating to refund of predeposit has become final. 3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11B(1) of the Central Excise Act, 1944 or under Section 27(1) of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested Xerox copy of the order in appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested Xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose. All pending refund applications already made under the relevant provisions of the Indirect Tax Enactments for return of such deposits and which are pending with the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees executed in lieu of cash deposits shall also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is supplied) 12. The aforesaid shows that in the above referred decision, the Apex Court did maintain that the interest on the amount of refund, if provided by the statute, such would govern the field, but the Court has to take all relevant factors into consideration while awarding rate of interest on compensation. 13. In the latter decision of the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) at paragraphs 5, 6, and 7, it was observed and held as under: 5. Since there was an inordinate delay on the part of the Revenue in refunding the amount due to the assessee this court had thought it fit that the assessee should be properly and adequately compensated and, therefore, in paragraph 51 of the judgement, the court while compensating the assessee had directed the Revenue to pay a compensation by way of interest for two periods, namely; for the assessment years 1977-78, 1978-79, 1981-82, 1982-83 in a sum of ₹ 40,84,906 and interest at 9 per cent from March 31, 1986, to March 27, 1998, and in default, to pay the penal interest at 15 per cent, per annum for the aforesaid period. 6. In our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be available. 16. From the conjoint reading of the decision of the Apex Court in the case of Sandvik Asia Limited Vs. Commissioner of Income Tax Others (supra) and the latter decision of the Larger Bench in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) it appears that the liability to pay interest on interest by the Revenue is not approved and to that extent the contention of the Revenue can be maintained. But the further contention of the Revenue that no interest whatsoever would be payable if the refund of the amount of tax or refund of the amount deposited towards tax is to be made, no interest whatsoever would be available by way of compensatory measure. 17. In our view, the general principles for awarding compensation to the Assessee for the delay in receiving monies properly due to it is not disapproved by the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra). 14. In our view, the abovereferred observation made by this Court in the abovereferred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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