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TMI Blog2015 (6) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... est can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same. Question raised could no more be considered as substantial question of law since such aspect is already covered by the principles of doctrine of merger well settled in the system of administration of justice and also in the abovereferred decision of the Apex Court as well as of this Court. - no substantial question of law would arise for consideration in the present Tax Appeals - Decided against Revenue. - Tax Appeal No. 351 of 2015, Civil Application (OJ) No. 424 of 2015 - - - Dated:- 9-6-2015 - Vijay Manohar Sahai, ACJ And R P Dholaria,JJ. For the Appellant : Ms Vacha Desai, Asst. Government Pleader For the Respondent : None JUDGMENT (Per : Honourable The Acting Chief Justice Mr. Vijay Manohar Sahai) At the request of Ms. Vacha Desai, learned AGP for the appellant we have taken up this appeal for admission. The following substantial question of law is raised in this tax appeal. Whether the Tribunal has erred in holding that dealer is entitled to interst under section 54[1][aa] on refund arising from appellate order? Learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 or any other provision. Assessment order is the result of assessment proceedings. The refund arises in appeal instead of original stage of assessment is covered within the expression order of assessment u/.s 41. The phrase does not give restricted meaning as original order of assessment u/s 41 or order of assessment u/s 41 of the first assessing officer. If the legislature so intended it would have certainly added the word or words to give such restricted meaning. Therefore, provision must be read reasonably and full meaning must be given to the words of statute as the object is to grant interest on the excess amount paid becomes refundable as a result of an original order of assessment passed by first assessing officer or corrected/modified order of assessment passed in appeal. (19) In the opinion of this Tribunal, the assessment order passed u/s 41 includes original order passed by first assessing authority as well as modified assessment order in appeal. Under an appeal the jurisdiction of the original order appealed against is exercised and therefore the order passed in appeal is corrected/modified order under the provision under which the appealed order is passed. The orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order which modified in appeal and resulted in to refund. The appellant cannot be put to loss for the mistake of the first assessing authority or for the reasons beyond control of the appellant. The narrow and restricted meaning will defeat the purpose of clause (aa) for which it is inserted. The accepted principle in interpreting a provision is that a construction, which would defeat its purpose, should be avoided. Even if more than one construction is possible that which preserves its workability and efficiency should be preferred to the one. which would render it otiose or sterile. (23) It is therefore, held that power to grant interest u/s 54(1)(aa) of the Act is liable to be exercised by every authority who has jurisdiction to deal with assessment in one way or another, and at one time or another. It is not confined strictly to the assessment authority alone as a prescribed authority. The appellant authority has also jurisdiction to allow interest at the appellate stage. The appellate authority is in continuation of the assessing authority and it can exercise such powers conferred u/s 54(1) (aa) of the Act. The term order of assessment should not hold any restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate stage. With respect, this is not correct proposition of law and it cannot be considered as binding precedent. 5. It is true that the Tribunal, earlier, in case of M/s Gayatri Tiles V/s. State of Gujarat had taken the view that when the refund has arisen in the appeal, the appellant would not be entitled to interest as seen from the wording of Section 54 of the Act but, it also appears that the very view has been considered by the Tribunal in the present impugned orders and the Tribunal has not concurred with the earlier view and has taken the view that interest on refund would be available to the appellant, if the amount of tax is to be refunded. 6. In our view, if principle of consistency in the orders passed by the Tribunal is to be maintained, one may at the first brush find that the earlier view taken by the Tribunal in case of M/s.Gayatri Tiles (supra) was binding to the Tribunal in the subsequent decision and, therefore, the Tribunal in the impugned orders, could not have taken the another view including the view taken in case of M/s.Saurashtra Chemical Ltd. (supra). 7. The learned A.G.P. submitted that the view taken by the Tribunal in case of M/s.Sau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances arise in the Second Appeal or in any further appeal, expressly provided by the statute and the order of assessment of assessing authority or the first Appellate Authority is modified. 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 discrimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessee, but on the aspect of compensation to the Assessee, the Apex Court, in the said decision under the head as to whether on general principles the Assessee ought to have been compensated 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Supreme Court vide its order dated 26112001 dismissed the appeal. Even though the Apex Court did not spell out the reasons for dismissal, it can well be construed in the light 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case, the appellant'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 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 fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute, such provision has to govern the field. Therefore, the Court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. (Emphasis 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 197778, 197879, 198182, 198283 in a sum of ₹ 40,84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t paragraph 7, it was observed that the interest provided under the statute, which may be claimed by the Assessee from the Revenue would be available and interest on such statutory interest 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). 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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