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TMI Blog2015 (3) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the Assessee on the amount of refund, which has resulted pursuant to the order of the first Appellate Authority. Under these circumstances, the State has preferred the present appeal. 3. We have heard Mr.Dave, learned AGP for the Revenue and Mr.Mehta, learned Counsel for the Assessee, who has appeared upon advance copy. 4. As such, in our view, the question, which is raised by the Revenue in the present appeal, is already covered by the decision of this Court in Tax Appeal No.87 of 2015 and allied matters decided on 9.2.2015. We may record that in the said decision, this Court observed, thus:- "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 earlier view taken in case of M/s.Gayatri Tiles (supra) is appropriate or not? 9. The learned A.G.P. contended that as per the provisions of Section 54(1)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed 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 the test of constitutional provision. But, when the legislature is silent about entitlement of interest on refund of the tax amount already paid by the citizen, the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 is not in accordance with law. Therefore, that on this issue as well, the impugned judgment cannot be sustained and ought to be reversed. In the present context, it is pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 21-2002]" A close scrutiny of the contents of the Circular dated 2.1.2002 would disclose as to the modalities for return of predeposits. It again reiterated that in terms of the Supreme Court order such predeposit must be returned within 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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 Rs. 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law. COMPENS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 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 Rs. 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 case of M/s.Saurashtra Chemical (supra) inconsonance with the abovereferred view taken by us and thereafter, if the Tribunal has made departure from its earlier view taken in M/s.Gayatri Tiles (supra), we do not find that the later view, ..... 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