TMI Blog2015 (3) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by our view as well as the referred decision of the Apex Court and of this Court, should be deprecated or further examined which is on the mere principles of consistency to be maintained by the Tribunal and we find that no useful purpose would be served in further examination thereto. - no substantial question of law would arise for consideration in the present Tax Appeals, as sought to be canvassed. - Decided against Revenue. - TAX APPEAL NO. 87 OF 2015 WITH CIVIL APPLICATION (OJ) NO. 84 OF 2015 IN TAX APPEAL NO. 87 OF 2015 WITH TAX APPEAL NO. 88 OF 2015 WITH CIVIL APPLICATION (OJ) NO. 83 OF 2015 IN TAX APPEAL NO. 88 OF 2015 WITH TAX APPEAL NO. 100 OF 2015 WITH CIVIL APPLI - - - Dated:- 9-2-2015 - Jayant Patel And S. H. Vora,JJ. For the Appellant : Mr. Chintan Dave AGP JUDGMENT (Per : Honourable Mr. Justice Jayant Patel) 1. As in all the appeals, common question arises for consideration, they are being considered simultaneously. 2. In all matters, the Revenue has preferred the appeal mainly on 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 refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment passed in appeal. (19) In the opinion of this Tribunal, the assessment order passed u/s 41 includes original order passed by first assessing authority as well as modified assessment order in appeal. Under an appeal the jurisdiction of the original order appealed against is exercised and therefore the order passed in appeal is corrected/modified order under the provision under which the appealed order is passed. The order passed in the appeal against original assessment order u/s 41 is assessment order u/s 41 and the original order of assessment merges in it. The intention of the legislature cannot be presumed that the refund arises at the first stage of assessment is only eligible for interest and orders of assessment passed at subsequent stages resulted into refund are not entitled to interest. Appeal proceedings are continuing single proceedings of assessment. Therefore, order passed in appeal is an order of assessment u/s 41. The intention is of paying interest on refund arises in order of assessment u/s 41 and the modified assessment order passed in appeal is also covered under the clause (aa). The close scrutiny of clause (aa) reveals that the dealer is eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with assessment in one way or another, and at one time or another. It is not confined strictly to the assessment authority alone as a prescribed authority. The appellant authority has also jurisdiction to allow interest at the appellate stage. The appellate authority is in continuation of the assessing authority and it can exercise such powers conferred u/s 54(1)(aa) of the Act. The term order of assessment should not hold any restricted meaning of assessment only. Provisions made u/s 54(1)(aa) of the Act are benevolent provisions and they are inserted by the legislature with a view to compensate the financial loss to be incurred to assessee. Only with a view to prevent the future default and to make the assessee absolutely free about his tax liability, the provision has been inserted. Passing of appellate order is merely a rectification or correction in original order. It is simply a merger as there cannot be more than one operative order governing the same subject matter. The strict interpretation of section 54(1)(aa) as was done earlier by this Tribunal leads to manifest unjust result which could never have been intended by the State Legislature and therefore, it is necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is to be maintained, one may at the first brush find that the earlier view taken by the Tribunal in case of M/s.Gayatri Tiles (supra) was binding to the Tribunal in the subsequent decision and, therefore, the Tribunal in the impugned orders, could not have taken the another view including the view taken in case of M/s.Saurashtra Chemical Ltd. (supra). 7. The learned A.G.P. submitted that the view taken by the Tribunal in case of M/s.Saurashtra Chemical Ltd. (supra) which is relied upon by the Tribunal in the impugned orders, is also challenged by the State Government subsequently as per the decision of the State Government but, as there is long delay, the application is yet to be heard for condonation of delay and the matter is yet to be circulated. 8. In our view, when there are two different views of the Tribunal, one for entitlement of interest on the appellate order and another for non-entitlement of interest on the appellate order for refund, we may instead of examining the aspect of consistency to be observed by the Tribunal, we may further examine the aspect as to whether the subsequent view taken by the Tribunal in case of M/s.Saurashtra Chamical Ltd.(supra) or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the first Appellate Authority or thereafter, the second Appellate Authority or even third Appellate Authority as the case may be. The interpretation canvassed by the Revenue of Section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of doctrine of merger which is well accepted doctrine incorporated in the system of administration of justice. 11. Apart from the above, it may also result into discriminatory treatment to the extent that one, who succeeds in the assessment and is entitled to the refund, would get interest on refund but the one, who has carried the matter in appeal and becomes entitle to get the refund on account of order of the Appellate Authority, would not get interest. 12. It is true that in taxing statute, principles of equity may have little role to play but at the same time, any statute in taxation matter should also meet with the test of constitutional provision. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provisions of the Act, on general principles it ought to be compensated for such deprivation. In the impugned order, the Bombay High Court has held that no compensation is required to be paid since ... there was a serious dispute between the parties, which was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the deposit made becomes returnable and an attested Xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the 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 conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance 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 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inordinate delay on the part of the Revenue in refunding the amount due to the assessee this court had thought it fit that the assessee should be properly and adequately compensated and, therefore, in paragraph 51 of the judgement, the court while compensating the assessee had directed the Revenue to pay a compensation by way of interest for two periods, namely; for the assessment years 1977-78, 1978-79, 1981-82, 1982-83 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the amount of tax or refund of the amount deposited towards tax is to be made, no interest whatsoever would be available by way of compensatory measure. 17. In our view, the general principles for awarding compensation to the Assessee for the delay in receiving monies properly due to it is not disapproved by the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra). 14. In our view, the abovereferred observation made by this Court in the abovereferred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learned A.G.P. that the interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same. 15. In view of the aforesaid observations and discussion, we find that the question raised could no more be considered as substantial question of law since such aspect is already covered by the principles of doctrine of merger well settled in the system of administration of justice and also in the abovereferred decision of the Apex Court as well as of this Court. 16. When the Tribunal has taken the view in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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