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TMI Blog2019 (11) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted facts and circumstances of the present case, the assessee finds no support from the provisions of Section 24(2) of the Act. In SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT ] , the Supreme Court considered a prayer for grant of interest for delay in effecting refund pursuant to an appellate order. After analysing the provisions of Sections 244 and 244A of the Income Tax Act 1961, the Bench concluded that the statute did not provide for the payment of interest as prayed for. However on general principles the Bench held that the assessee ought to be compensated for the inordinate delay in receiving money legally due to it, in that case, seventeen long years. Thus the Department was directed to pay interest at the rate of 9% for part of the period when the petitioner was deprived of the capital. Petition dismissed. - W.P.No.33571 of 2012 - - - Dated:- 31-10-2019 - Dr. Justice Anita Sumanth For the Petitioner : Mr.K.A.Parthasarathy for M/s.N.Inbarajan For the Respondents : Mr.V.Haribabu Additional Government Pleader (Taxes) ORDER Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii)This clarification was challenged by both NLC (in WP.No.28524 of 2007) and the petitioner (in WP.No.15072 of 2007). Both the writ petitions were allowed by this Court on 17.03.2008 in the following terms: 'In the light of the same, both the writ petitions will stand allowed as prayed for and the respondents are hereby directed to restore the tax at 4% and refund the balance to the appropriate parties. This exercise shall be undertaken without a period of eight weeks from the date of receipt of a copy of this order. The parties are directed to bear their own costs. Connected Miscellaneous Petitions will stand closed.' (ix)On 27.05.2008, the aforesaid order dated 17.03.2008 was stayed and on 26.02.2010 the writ appeals filed by the Revenue challenging the order of the learned Single Judge dated 17.03.2008 was dismissed. Thus the Bench concluded that the transaction was one of sale of scrap, taxable at 4% only. (x)On 16.03.2011, the Civil Appeal filed by the Revenue before the Supreme Court challenging the order of the Division Bench as aforesaid was dismissed in the following terms: 'Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess within three months from 16.03.2011 and pay over the amount as determined within two months thereafter. Thus the timeline that was set by the Court was (i) a determination of the excess re-payable to be made on or before 10.06.2011 and (ii) the amount so determined to be paid over to the petitioner on or before 10.08.2011, in accordance with law. This has been complied with, the tax remitted having been paid over on 29.07.2011 along with surcharge. 7.The provisions of Section 24(4) of the Tamil Nadu General Sales Tax Act read thus: 'Section 24(4) : Where the tax paid under this Act is found to be in excess on final assessment or revision of assessment, or as a result of an order passed in appeal, revision or review, the excess amount shall be refunded to the dealer after adjustment of arrears of tax, if any, due from him. Where the excess amount is not refunded to the dealer within a period of ninety days from the date of the order of assessment or revision of assessment and in the case of order passed in appeal, revision or review within a period of ninety days from the date of receipt of the order, the Government shall pay by way of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period when the petitioner was deprived of the capital. 11. The dictum of the judgment of the Supreme Court in Sandvik Asia (supra) was doubted by a subsequent Bench of the Supreme Court that had referred the issue for reconsideration and clarification. Consequently a Full bench had been constituted which, in Commissioner of Income Tax, Gujarat v. Gujarat Fluro Chemicals (358 ITR 29) clarified the position in a batch of appeals involving the question of payment of interest/compensation by the Department to an assessee on delayed refunds granted in terms of the provisions of the Income Tax Act, 1961. 12. The facts in the case of Gujarat Fluoro Chemicals, one of the respondents in the aforesaid batch before the Supreme Court, was that the company/assessee in that case, had deducted tax at source at the rate of 30% under Section 195 of the Income Tax Act. By virtue of an amendment, the remittance made by the assessee became liable to be refunded and hence the assessee claimed such refund. In November 1990, the refund was sanctioned by the Assessing Authority. The assessee thereafter sought interest on the amount refunded. The request was reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n default, to pay the penal interest @ 15% 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 was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case, I have set out the sequence of events commencing from 2005 in relating to the taxable event giving rise to the refund. In July 2005, NLC had first sought a clarification from the Commissioner in regard to the rate of tax on the turnover from sale of the condemned B C plant. The clarification was adverse to the assessee and the litigation that commenced thereafter was settled only on 16.03.2011 by the Supreme Court. Thus the assessee seeks compensation for the loss of capital, in respect of the amount of tax recovered from it for the period 22.11.2005 to 29.07.2011. 18. The principles that govern the grant of compensation as laid down by the Full Bench in Gujarat Fleuro have been set out at paragraphs 12-14 above. 19. I now proceed to apply the same to the facts and circumstances of the present case. Clearly, there is a dispute on the interpretation of law in this matter. According to the petitioner the turnover from sale of the B and C plant is to be taxed at the rate of 4% as scrap, whereas, according to the Revenue, it is to be taxed as machinery at the rate of 12%. The Department relies on a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue carried the matter in further appeal, considered the following question of law: Whether the Hon ble Tribunal has erred in holding that the dealer is entitled to interest under Section 54(1)(AA) on the refund, arising from the appellate order . 23.The Bench considered the provisions of Sections 41 and 54(1)(AA) of the Gujarat Sales Tax Act, dealing with the Assessment of taxes and Interest on delayed refunds respectively. General Sales Tax enactments differ from State to State. The Gujarat Sales Tax Act provides for the grant of interest on the refund of any amount becoming due to a dealer by virtue of an order of assessment under Section 41 of that Statute. Section 54 providing for interest on delayed refunds is set out hereunder: Section 54 : Interest on delayed refunds (1)1[(aa) Where refund of any amount becomes due to the dealer by virtue of an order of assessment under section 412[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 fourteen per cent. per annum on the said amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be calculated from the date of the receipt of such order by the 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. 24. In that case, the request for refund had been rejected on the ground that the refund arose consequent to an appellate order whereas the entitlement to refund in terms of Section 54 was only pursuant to an assessment order. In that context, the Bench held that an order of assessment passed by a competent authority would merge with an order passed by an Appellate Authority in appeal and upon such merger of the order of assessment with an appellate order an assessee who had succeeded in appeal would become entitled to a refund on the relief granted in appeal. If this were not to be so, there would a discrimination as regard the treatment accorded to refunds qua an appellate order vis- -vis an assessment order. 25. The Bench thereafter relied heavily on the judgment of the Supreme Court in the case of Sandvik Asia (s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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