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TMI Blog2016 (9) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2016 With TAX APPEAL NO. 678 of 2016 - - - Dated:- 29-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE APPELLANT : MR PRANAV TRIVEDI, AGP ORAL ORDER (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) 1. Both the Tax Appeals are filed for the purpose of challenging the decision delivered by the Gujarat Value Added Tax Tribunal, Ahmedabad on 8.1.2015 with respect to assessment years 1998-99 and 1999-00 and since the issues are identical and facts are similar, both the tax appeals are disposed of by this common judgment and order. 2. The following substantial questions of law are raised by the appellant for our consideration : (i) Whether the Hon ble Tribunal was justified in holding that the respondent is entitled to interest on refund u/s. 54 of the erstwhile Gujarat Sales Act,1969? (ii) Whether the Hon ble Tribunal was right in holding that the appeal proceedings are an extension of assessment proceedings ? (iii) Whether the Hon ble Tribunal was justified in directing the first appellate authority to pass consequential orders in a specified time limit ? 3. The brief facts leading to filing of present appeals are that the respondent is eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very issue was dealt with by coordinate bench of this Court in earlier decision in case of State of Gujarat V/s. Doshi Printing Press rendered in Tax Appeal No.87 of 2015 and allied matters on 9.2.2015 wherein, this Court has held that interest can be awarded even if it is not expressly barred by the statute or that the taxing statute is silent about the same. In that case, the Division Bench of this Court, after considering the decision of the Apex Court in case of Commissioner of Income Tax V/s. Gujarat Fluoro Chemicals , reported in (2014) 1 SCC 126, held in Para.14 that interest can be awarded. Relevant Para.13 and 14 of the said decision is reproduced, thus; 13. In addition to the above, the principles of compensatory measure may apply if the taxing statute is silent about the said aspect. The Legislature may control quantification of interest or the entitlement of interest on refund subject to meeting with the test of constitutional provision. But, when the legislature is silent about entitlement of interest on refund of the tax amount already paid by the citizen, the interest can be considered by way of a compensatory measure. The reference may be made to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to pay. In each and every case an authority must at least claim to act in accordance with law and hence claim it has no obligation to pay for some reason or another. When the claims of the authority are found to be unsustainable or erroneous by the Courts it follows that the authority has acted wrongfully in the sense of not in accordance with law and compensation to the party deprived must follow. If the decision of the High Court is upheld it would mean that there can never be any wrongful retention by an authority until this Court holds that their stand is not in accordance with law. Therefore, that on this issue as well, the impugned judgment cannot be sustained and ought to be reversed. In the present context, it is pertinent to refer to the Circular on Trade Notice issued by the Central Excise Department on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 returned. 4. The above instructions may be brought to the notice of the field formations with a request to comply with the directions and settle all the claims without any further delay. Any deviation and resultant liability to interest on delayed refunds shall be viewed strictly. 5. All the trade associations may be requested to bring the contents of this circular to the knowledge of their members and the trade in general. 6. Kindly acknowledge receipt. [Source : M.F.(D.R.) F.No. 275/37/2KCX. 8A, dated 212002] A close scrutiny of the contents of the Circular dated 2.1.2002 would disclose as to the modalities for return of predeposits. It again reiterated that in terms of the Supreme Court order such predeposit must be returned within 3 months from the date of the order passed by the Tribunal, Court or other f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are dversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 197879, it has been deprived of an amount of ₹ 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. COMPENSATION: The word 'Compensation' has been defined in P. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 40,84,906 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 view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noticed, in Sandvik case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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