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TMI Blog2019 (9) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(1)(aa) is concerned. Explanation 1 to the third proviso makes the picture further clear. Explanation 1 clarifies that if the delay in granting the refund within the period specified in clause (a) or (b) is attributable to the dealer, whether wholly or in a part the period of the delay attributable to him shall be excluded from the period for which interest is payable. If the third proviso as invoked by the respondents is not applicable and could not have been invoked, the entire calculation of the amount by wrongly excluding the period would be incorrect. The entire exercise will have to be undertaken afresh keeping in mind what has been observed by this Court in this judgement, more particularly, the fact that the third proviso could not have been invoked as the same is not applicable - In the peculiar facts of the case and also having regard to the fact that this is a long drawn litigation, this time we direct the Commissioner himself to look into the matter afresh - matter on remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the date of deposit of the tax till the date of the assessment order excluding the period during which the appeals were pending. 2.2 It appears from the materials on record that the writ applicant is engaged in the manufacturing and selling of air conditioners, air coolers, its parts. The writ applicant is also is in the business of execution of turnkey contracts which involves design, supply, installation, testing and commissioning of the central air conditioning plants construed to be indivisible works contract. 3. The writ application at hand concerns the assessment period 1994-95. As the controversy in the case at hand is in a narrow compass, we may straightway go to the order passed by the Gujarat Value Added Tax Tribunal at Ahmedabad (for short "the Tribunal") in the Second Appeals preferred by the writ applicant. The Second Appeals were preferred by the writ applicant before the Tribunal against the orders passed by the Joint Commissioner of commercial Tax. The operative part of the order passed by the Tribunal while allowing all the Second Appeals preferred by the writ applicant is as under : "These Appeals are allowed. The orders passed by the Authorities Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court held that the Dealer shall be entitled to interest under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969, on refund arising from the appellate order. Consequently, by impugned order, the learned Tribunal has allowed the appeals by holding that the Dealer shall be liable to pay tax at the rate of 5%. Therefore, as such, the impugned orders passed by the learned Tribunal wherein the appeals against the assessment order/ first appellate order are allowed. Therefore, on facts also, the decision in the aforesaid case shall be applicable. At this stage,it is required to be noted that as such, the State now cannot dispute that the Dealer was liable to pay tax at the rate of 5% only against which he paid 15% as per the assessment order. Therefore, the Dealer shall be entitled to the refund of differential amount and as the said amount was retained/ recovered by the State, the Dealer shall be entitled to interest on the refund. As such, the issue involved is directly covered by the decisions of the Division Bench of this Court referred to hereinabove. 5. In view of the above and for the reasons stated above, no substantial question of law arises in the present appeals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order : 1.00. Ms.Maithili Mehta, the learned AGP appearing for the respondents - State submitted that the SLP preferred by the State is likely to come up for hearing before the Supreme Court on 01/07/2019. Ms.Mehta further submitted that the State would be pressing hard before the Supreme Court for stay of the operation, implementation and execution of the order dated 29/06/2018 passed by this Court in Tax Appeal Nos.748/2018 to 751/2018, respectively. 2.00. We take serious note of the fact that although the tribunal had issued directions with regard to the refund of the amount along with interest at the applicable rate way back in 2015, yet, the Tax Appeals against the said order of the Tribunal came to be preferred by the State after a period of three years before this Court and ultimately by order dated 29/06/2018, this Court dismissed all the four Tax Appeals observing as under :- "4. Shri Pranav Trivedi, learned Assistant Government Pleader appearing on behalf of the appellant has submitted that as such, the Revenue is aggrieved by the impugned decision of the learned Tribunal holding that the respondent is entitled for claim of interest on refund which may be allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of this Court referred to hereinabove." 3.00. Thus, the issue with regard to the entitlement of the claim of interest on refund under section 54(1) (aa) of the Gujarat Sales Tax Act, 1969 came to be set at rest by this Court in June, 2018. However, the SLP came to be preferred in April, 2019. We are informed that the Supreme Court has condoned the delay and the SLP has now been ordered to be posted for hearing. 4.00. If ultimately any interim order is passed by the Supreme Court, staying the operation of the order dated 29/06/2018 passed by this Court in Tax Appeal Nos.748/2018 to 751/2018, impugned in the SLP, it would be altogether a different scenario. However, as on date, the directions to pay the requisite amount with interest applicable is staring in the face of the State past five years. 500. Ms.Mehta submitted that all steps are being taken to see that the aforesaid SLP is taken up for hearing on urgent basis. 6.00. For the present, we adjourn this matter to 03/07/2019. However, if there is no further development in the Supreme Court, then we may consider to direct the respondents - State to deposit the requisite amount either with the tribunal or wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 10.10.2017. 4. I say and submit that vide order dated 03.10.2019, the respondent authorities have calculated interest on refund considering Section 54(1)(aa) proviso. For the sake of convenience, the Section 54(1)(aa) read with proviso is represented herein below : "(1)(aa) Where refund of any amount becomes due to the dealer by virtue of an order of assessment under section 41, for the specified year, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest at the rate of twenty four per cent per annum, on the said amount from the date immediately following the date of closure of the accounting year to which the said amount relates to the date of order of assessment : PROVIDED that where dealer has paid any amount after the closure of the accounting year and such amount is required to be refunded, no interest shall be payable for the period from the date of closure of such accounting year to the date of payment of such amount: PROVIDED FURTHER that no interest shall be payable on the amount of refund which does not exceed rupees one hundred." On considering the proviso for calculating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting year to the date of payment of such amount : PROVIDED FURTHER that no interest shall be payable on the amount of refund which does not exceed rupees one hundred." Thus, considering the above two aspects, the authorities would be entitled to pay interest amounting to ₹ 70,83,338/- in all. The payment of the said amount of interest in under process." 3.5 The amount to be paid towards interest as determined by the respondent is not acceptable to the writ applicant. According to the writ applicant, the time period excluded by the respondent by invoking the third proviso to Section 54(1)(aa) of the Act for the purpose of calculating the amount towards interest is not correct. The writ applicant has also provided us with a chart calculating the amount to be paid towards interest. The chart provided by the writ applicant is as under : Details of interest claimed for the years 1994-95 to 1996-97 : 3.6 There is a huge variance in the two figures. According to the respondents, an amount of ₹ 70 Lac and odd is to be paid towards interest, whereas, according to the writ applicant, an amount of ₹ 4,40,00,000/- (Four Crores Forty Lac) is to be paid toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n granting the refund within the period specified in clause (a) or (b) is attributable to the dealer, whether wholly or in a part the period of the delay attributable to him shall be excluded from the period for which interest is payable. Explanation 2 : In the case of an order relating to refund passed in appeal or in revision, the period of ninety days shall be calculated from the date of the receipt of such order by Sales Tax Officer. (2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Commissioner whose decision shall be final." One can therefore, see that under the said provision a dealer entitled to refund by virtue of an order of assessment would receive in addition to such amount, simple interest at the specified rate to be calculated from the date immediately following the date of closure of the accounting year to which such amount relates till the date of order of the assessment. The explanation to said clause (aa) to sub-section (1) of Section 54 was added under the Gujarat Act 10 of 1994 but with retrospective effect from 01.07.1993. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso to sub-section (1) of Section 54 nowhere provides for the exclusion of the time period during which the appeal or revision application is pending either before the Tribunal or before the High Court. The proviso only states that the payment of interest is required to be withheld till the appeal or revision application is pending before the Tribunal or before the High Court. According to Mr.Mehta, in view of the clear provision of Section 54(1)(aa) of the Act, the decision of the respondent No.2 excluding the time period during which the appeals were pending is contrary to the provisions of Section 54(1)(aa) of the Act. 4.4 Mr.Mehta pointed out something important. He pointed out that the impugned assessment order dated 10.10.2017 giving rise to the refund was never a subject matter of any appeal or revision application by any of the parties. The appeal before the Tribunal as well as before this Court as well as before the Supreme court were in connection with the proceedings for determining the rate of tax on fabrication and installation of water chilling plant. In such circumstances also, the proviso to Section 54(1) of the Act would not be applicable. 5. On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso ordinarily is but a proviso, although the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other and result in a harmonious construction." 6.2 Further, a three Judge Bench of the Supreme Court by majority of 2:1 in the case of S. Sundaram Pillai v. V. R. Pattabiraman (1985) 1 SCC 591 : (AIR 1985 SC 582) has elaborately examined the scope of proviso to the substantive provision of the Section and rules of its interpretation. The relevant paras are reproduced hereunder: "30. Sarathi in Interpretation of Statutes at pages 294295 has collected the following principles in regard to a proviso: (a) When one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject-matter of the proviso. (b) A proviso must be construed with reference to the preceding parts of the clause to which it is appended. (c) Where the proviso is directly repugnant to a section, the proviso shall stand and be held a repeal of the section as the proviso speaks the latter intention of the makers. (d) Where the section is doubtful, a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself. 6.7 At the cost of repetition, we may once again reproduce the third proviso alongwith the two explanations : "PROVIDED that no interest shall be payable where an appeal or revision application is filed or where an application has been made to the Tribunal to refer to the High Court any question of law. Explanation 1 : If the delay in granting the refund within the period specified in clause (a) or (b) is attributable to the dealer, whether wholly or in a part the period of the delay attributable to him shall be excluded from the period for which interest is payable. Explanation 2 : In the case of an order relating to refund passed in appeal or in revision, the period of ninety days shall be calculated from the date of the receipt of such order by Sales Tax Officer." 6.8 We find it extremely difficult to accept the argument canvassed on behalf of the respondents that the third proviso would be applicable in the present case. In our opinion, the third proviso is in context with Section 54(1)(a) and (b). The third proviso will have no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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