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TMI Blog2019 (8) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... pana Raval, the learned senior standing counsel waives service of notice of rule for and on behalf of the respondent. 2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs : 7. the petitioner, therefore, prays that this Hon ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to : ( a) direct the Respondent to release refund for the Assessment Year 2004-05 along with interest; ( b) pending admission, hearing and final disposal of this petition, direct the Respondent to release the refund due to the petitioner for the Assessment Years 2004-05; ( c) any other and further relief deemed just and proper be granted in the interest of justice; ( d) to provide for the cost of this petition. 2.1 The writ applicant seeks to challenge the inaction on the part of the respondent in not releasing the refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the writ applicant for the Assessment Year 2004-05 i.e. the year under consideration. In such circumstances referred to above, the writ applicant is here before this Court with the present writ application. 3. In response to the notice issued by this Court to the respondent, Mrs. Kalpana Raval, the learned senior standing counsel has appeared for the Revenue and opposed this writ application. Mrs. Raval invited our attention to the affidavit-inreply filed on behalf of the respondent, duly affirmed by one Santosh Kumar, Income Tax Officer, Ward-1(3)(2), Surat. Our attention was invited, more particularly, to paragraph 10 of the reply. Paragraph 10 reads as under : 10 It is further submitted that, the appeal effect to the order of the Ld.CIT(A) was given on 25/04/2013 and the appeal effect to the order of Hon ble ITAT was given on 06/06/2018. The appeal effects to the above appellate orders were given manually and the same was uploaded on 31/01/2019 and duly forwarded to the CPC Bangalore so that the resultant effect would entail the assessee to receive refund of ₹ 77,76,561/-. But unfortunately, due to some technical problem beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has also accepted that there has been a delay in the refund of the particular amount. 4.1 The issue as such raised in this writ application is no longer res integra. We may refer to a decision of this Court in the case of Nima Specific Family Trust vs. Assistant Commissioner of Income Tax reported in [2018] 100 taxmann.com 262 (Gujarat) , wherein this Court has explained the scope of Section 244A of the Act, 1961. We may refer to the relevant observations made by this Court in the above referred decision : 9. We would first address the petitioner s grievance of undue delay in granting the refund. We may recall that after the Assessing Officer passing order of assessment on 29th December 2006 making substantial additions, raising tax demands, a sum of ₹ 97.41 lakhs [rounded off] was recovered through adjustment of refund for earlier assessment year. Subsequently, the petitioner s appeal was substantially allowed by the Appellate Commissioner on 5th March 2009. This gave rise to the petitioner s claim for refund of excess tax collected. Though the Department had filed appeal against the order of Commissioner [Appeals], there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner. In this context, learned counsel Shri Soparkar had made two principal claims one was that additional interest under subsection [1A] of Section 244A of the Act should be granted. He argued that this provision was inserted by the legislature by way of a remedial measure and should therefore be applied to all pending cases, even those which might have arisen prior to enactment of such section. His second prayer was to grant compensation for long delay in granting refund. He contended that though the Supreme Court in the case of Gujarat Flourochemicals Ltd. v. CIT [2015] 377 ITR 307/230 Taxcmann.com 204 [Guj.] had disapproved the claim of interest-on-interest, had not held that the compensation for delay in giving refund cannot be ordered. 13. In this context, we may refer to the relevant statutory provisions. Section 244A of the Act pertains to Interest on refunds. Subsection [1] of Section 244A mandates the Revenue to grant interest at the statutory rate where refund of any amount becomes due to the assessee under the Act. The situations envisaged under subsection [1] of Section 244A are subdivided into three parts contained in clauses (a), (aa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or Commissioner : Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order : Provided further that where an order under section 250 or section 254 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 of section 263 or section 264 shall be made within the time specified in subsection (3). 16. We may note that in the earlier form, Section 153 of the Act did not contain any provision similar or equivalent to subsection (5) of Section 153 of the Act. 17. Brief analysis of the above provisions would show that prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner, or passed by the revisional authority; as the case may be. 19. Proviso to subsection (5), however, provides that where it is not possible for the Assessing Officer to give effect to such order within such time, for reasons beyond his control, the Principal Commissioner or Commissioner, on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order. The further proviso to sub-sec. (5) provides that where an appellate or revisional order requires verification of any issue by way of submission of any document by the assessee or any other person, or where an opportunity of being heard is to be provided to the assessee, the order giving effect to such order shall be made within the time specified in sub-sec. (3). Subsection (3) in turn provides for a time limit for passing fresh assessment pursuant to appellate or revisional order by prescribing time limit of nine months from the end of financial year in which the order under section 254 is received, or order under section 263 or section 264 is passed. 20. Analysis of subsection (5)of Section 153 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. [1A] of Section 244A. 22. This somewhat detailed analysis of the statutory provisions was necessary in order to ascertain whether the provisions are meant to be applied prospectively or retrospectively. It is well settled that a statutory amendment making substantive changes would have prospective effect unless either expressly or by necessary implications, the legislature has provided for retrospective operation thereof. In his book Principles of Statutory Interpretation , Justice GP Singh refers to observations of Frankfurter in his article Some reflections on the Reading of Statutes , wherein, it is observed that, Legislation has an aim, it seeks to obviate some mischief, to supply and indequacy, to effect a change of policy, to formulate a plan of government. That aim, that policy is not drawn, like nitrogen, out of the air, it is evidenced in the language of the statute, as read in the light of other external manifestations of purpose. 23. Though it is well settled that statutes dealing with substantive rights are prima facie prospective, unless it is expressly or by necessary implication made to have retrospective operation, such ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the same were not meant to have retrospective effect. The computation provision for granting such interest provides for two terminal points the beginning point is the end of the period beginning from the date following the date of expiry of time allowed under section (5) of Section 153 and the end point of computing the interest would be the date on which refund is granted. Applying such provisions for the past period would immediately throw a question as to from which date such interest liability would arise. For the past period, there being no provision in subsection (5) of Section 153 laying time limits, the computation of beginning of the period for granting interest would be unworkable. Claim of interest for the past period cannot be accepted for want of any machinery provided by the legislature to calculate such interest. The legislature therefore by necessary implications did not desire to give any retrospective effect to these provisions. The claim for additional interest therefore cannot be granted for the periods when the provisions of Section 244A [1A] and 153 [3] as they stand now were not in statute book at all. 27. There would however be a cave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for interest on interest which he agreed would not be payable by virtue of the judgment of the Supreme Court in the case of Gujarat Flourochemicals Limited [Supra] and also independent of the additional interest under subsection [1] of Section 244A. This judgment has a short history, which we may record. As is well-known, the Supreme Court in the case of Sandvik Asia Limited v. CIT [2006] 150 Taxman 591/280 ITR 643 [SC] had an occasion to consider a situation in which the advance tax paid by the assessee became refundable pursuant to an appellate decision. The principal was refunded but refund of interest was withheld for a long time. The Supreme Court posed a question to itself whether on general principles, the assessee ought to have been compensated for the inordinate delay for receiving monies properly due to it. It was noticed that the revenue has retained such monies of the assessee for the periods ranging from 12 to 17 years. The Court held that the revenue having unjustifiably withheld the refund for seventeen years without any reason, the assessee would be entitled to receive such amount with further interest. The larger Bench of the Supreme Court considered the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest for delayed refund made by the Revenue. The Court noticed observations of the Apex Court that the interest on the amount of refund, if provided by the statute, such would govern the field. The Court was of the opinion that in case of Gujarat Flourochemicals Limited [Supra], the Supreme Court did not shut out the question of directing the Government to pay compensation for non payment of statutory interest. In this background, the Court gave suitable directions for payment of compensation. 30. The situation therefore emerges is that as held by the Supreme Court in the case of Gujarat Flourochemicals Limited [Supra], whenever statute provides for interest on delayed refunds, the same would hold the field. Further, there cannot be any direction for payment of interest on interest. In the present case, the statute provides for interest on delayed refund in terms of subsection [1] of Section 244A of the Act. As and when applicable, newly inserted subsection [1A] of Section 244A provides for additional interest. The statutory provisions thus govern the situations where the interest on delayed refund would be paid as also the rate on which such interest is to be ..... 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