2003 (11) TMI 99 - HC - Central Excise

Writ jurisdiction - Maintainability - interest for the amount earlier deposited - Refund - HELD THAT - The Government cannot deprive the enjoyment of the property without due recourse to law and this withholding cannot be termed to be a lawful one nor an established procedure under the law. Therefore this inaction is wholly unjustified and this has really caused the deprivation of the petitioner s enjoyment of the property namely the aforesaid amount. Therefore this is positively violative of the provision of Article 300A in Chapter IV under Part XII of the Constitution of India. When there is breach of constitutional right either by omission or by commission by the State such breach can be remedied under Article 226 of the Constitution of India. The petitioner could have earned interest during this period but because of the withholding this could not be done. I find in support of my observation from the judgment in case of Commissioner of C. Ex. Chennai v. Calcutta Chemical Co. Limited 2001 (6) TMI 69 - HIGH COURT OF JUDICATURE AT MADRAS . In that case a pre deposit amount was directed to be refunded with interest at the rate of 15% per annum. Of course at that point of time the rate of interest of Bank might be higher but having regard to the present facts and circumstances of this case the rate of interest as allowable now admittedly by the Reserve Bank of India in case of its bond not exceeding 8% per annum will be appropriate. Therefore I direct the respondents to pay interest at the rate of 8% on the aforesaid amount of Rs. 10 lacs to be calculated from January 2002 till 3rd April 2003 when the payment of principal amount was effected. This payment of interest shall be made within a period of three months from the date of communication of this order. However there will be no interest for this period. There will be no order as to costs. Accordingly the order passed by the department is set aside.

Summary

Issues Involved:
The issue involves the refusal of the appropriate department to pay interest for the amount earlier deposited and refunded, based on negligence on the part of the department concerned.

Judgment Details:

Issue 1 - Negligence on the part of the State:
The petitioner appealed to the CEGAT against penalties imposed, and the CEGAT ordered a refund of 50% of the amount deposited. The department delayed the refund despite the CEGAT's direction, leading to the petitioner's claim for interest. The Court noted that negligence by the State could be due to failure to discharge constitutional or statutory obligations. The Court held that the delay in refunding the amount was unreasonable and constituted negligent inaction by the Government, violating the petitioner's constitutional right under Article 300A of the Constitution of India.

Issue 2 - Claim for Interest:
The petitioner claimed interest on the refunded amount, citing a Madras High Court judgment allowing interest at 15% per annum in a similar case. The respondent department argued that there was no statutory right for the petitioner to claim interest. The Court found the respondent's argument unconvincing, as no reasons or explanations were provided for the delayed refund. The Court directed the respondents to pay interest at 8% per annum on the refunded amount from January 2002 to April 2003, in line with prevailing rates set by the Reserve Bank of India.

Conclusion:
The Court set aside the department's order, ruling in favor of the petitioner's claim for interest due to the Government's negligent delay in refunding the amount. The Court granted three months for the payment of interest and stated that no stay order was required. No costs were awarded, and parties were instructed to act on a xerox signed copy of the order for further proceedings.