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2016 (4) TMI 291 - GUJARAT HIGH COURT

2016 (4) TMI 291 - GUJARAT HIGH COURT - 2016 (42) S.T.R. 785 (Guj.) - Entitlement for payment of interest for the period from 03.06.2008 to 10.03.2010 - Refund claim was made on 24.01.2005 and the amount was refunded on 12.11.2010, hence delayed refund - Section 11BB of the Central Excise Act, 1944 - Respondent submitted that with effect from 03.06.2008, the amount had been transferred to the Consumer Welfare Fund and therefore, the liability of the revenue to pay any interest was discharged. .....

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not in a position to point out any provision of law which shows that when the amount is transferred to the Consumer Welfare Fund, the period for which the assessee would be entitled to interest under section 11BB of the Central Excise Act would stand curtailed. It is a settled legal position that insofar as the taxing provision is concerned, the same has to be construed strictly and one has to look merely at what is said in the relevant provisions; there is nothing to be read in; nothing to be i .....

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lenge the order of refund before any other forum. As regards the transfer of the amount to the Consumer Welfare Fund, the order passed by the Commissioner (Appeals) holding that there was unjust enrichment, was held to be erroneous and has been set aside, under such circumstances, no prejudice ought to be caused to the petitioner on account of any erroneous order passed by the respondents authority, without there being any default on part of the petitioner. Therefore, the petitioner is entitled .....

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od - Held that:- the petitioner was required to unnecessarily litigate in two rounds; in the first round, up-till the Tribunal and in the second round, upto this court, for the purpose of availing of the statutory interest payable to it. Under such circumstances, the petitioner is entitled to the grant of compensatory costs, which are quantified at ₹ 25,000/-. - Decided in favour of petitioner - SPECIAL CIVIL APPLICATION NO. 20496 of 2015 - Dated:- 18-3-2016 - MS. HARSHA DEVANI AND MR. G.R .....

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mpany interest of ₹ 3,07,423/- on delayed refund of ₹ 28,94,776/- for the period from 03.06.2008 to 10.03.2010. The petitioner also seeks a declaration that it is entitled to interest at appropriate rate (that may be fixed by this court) for delay in paying interest of ₹ 3,07,423/- for the period from 24.04.2015 till actual payment and also for paying interest on interest of ₹ 5,40,094/- for the period from 10.03.2010 to 10.11.2010. 2. The petitioner Company is engaged in .....

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vember 2004. On 24.01.2005, the petitioner Company filed a refund claim of ₹ 42,68,686/- with the third respondent - Assistant Commissioner of Service Tax, Division-1, Ahmedabad. A show cause notice dated 21st March, 2005 came to be issued to the petitioner Company proposing to reject the refund claim on the grounds of time-bar and unjust enrichment. The Assistant Commissioner of Service Tax passed an order in-original dated 31.01.2008 rejecting the entire refund claim. The petitioner Comp .....

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itioner carried the matter in further appeal before the Tribunal. Revenue also challenged the order of Commissioner (Appeals) before the Tribunal on the ground that the refund claim was time-barred and that the Commissioner (Appeals) ought not to have allowed the same. By a common order dated 06.11.2009, the Tribunal decided both the appeals whereby, it dismissed the appeal preferred by the revenue and partly allowed the appeal filed by the petitioner Company. The Tribunal, however, held that th .....

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here was a long delay in paying the refund to the petitioner Company, interest as provided under section 11BB of the Central Excise Act, 1944 as made applicable to matters under the Finance Act, 1944 also, was not paid by the third respondent. The petitioner, therefore, preferred an appeal before the Commissioner (Appeals) challenging the order dated 10.03.2010 to the extent the interest on delayed refund was not paid. It was the case of the petitioner Company that the refund claim was lodged on .....

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riod after 03.06.2008, the Commissioner (Appeals) held that the refund claim was sanctioned, but the amount was transferred to the Fund because of unjust enrichment and such order of Commissioner (Appeals) to refund the amount but crediting it to the Fund was an order of refund under section 11B(2) of the Central Excise Act and hence, no interest was payable for the period after 02.06.2008 because refund was paid to the petitioner Company within three months of the order of the Appellate Tribuna .....

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nal claiming interest of ₹ 3,07,423/- and also further interest on interest because the petitioner Company was unnecessarily dragged to litigate for the claim of refund as well as interest on delayed refund. The Tribunal, by the order dated 06.11.2015, dismissed the appeal observing that no interference was required in this case. The Tribunal held that the refund claim made on 24.01.2005 was sanctioned by the Commissioner (appeals) on 03.06.2015 by ordering transfer of the refund to the Fu .....

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king the relief noted hereinabove. 4. Mr. Paresh Dave, learned advocate for the petitioner invited the attention of the court to the provisions of section 11BB of the Central Excise Act, 1944 to submit that if any duty ordered to be refunded within three months from the date of receipt of application, then the statute provides for paying to the applicant interest on such duty from the date immediately after the expiry of three months from the date of such application till the date of refund of s .....

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e Central Excise Act that can be arrived at is that interest under the said section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of section 11 of the Act and that the Explanation does not have any bearing or connection with the date from which interest under section 11BB of the Act becomes payable. The court held that it is well settled proposition of law that a fiscal legislation has to be construed strictly and one .....

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s placed upon the decision of the Rajasthan High Court in the case of J. K. Cement Works v. Assistant Commissioner of Central Excise & Customs, 2004 (170) ELT 4 (Raj.) wherein, the court held that a close reading of section 11BB, which now governs the question relating to payment of interest on belated payment of interest, makes it clear that relevant date for the purpose of determination of the liability to pay interest is not the determination under sub-section (2) of section 11B to refund .....

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g the date on which decision has been rendered by the competent authority as to whether the amount is to be transferred to Welfare Fund or to be paid to the applicant. The court held that if ultimately it is decided that notwithstanding the refund has become due as per final adjudication and amount is to go to the Consumer Welfare Fund, it brings an end to the claim of the applicant whether to refund or interest thereon. However, ultimately if it is found that amount is not to go to the Consumer .....

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Income Tax, Gujarat v. Gujarat Fluoro Chemicals, 2013 (296) ELT 433 (SC), the petitioner cannot claim interest on interest as the court has clarified that it is only that interest provided for under the statute which may be claimed by an assessee from the revenue and no other interest on such statutory interest. It was submitted that, however, the petitioner can still be entitled to claim compensation from the respondent as the petitioner has been forced to litigate initially for the purpose of .....

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ion, we would not direct payment of such interest at the statutory rate but would provide for reasonable interest looking to the present trend. The court, in the facts of the said case, awarded simple interest at the rate of 9% per annum. It was submitted that therefore, though this court may not grant interest on interest, at least some amount is required to be directed to be paid to the petitioner by way of compensatory costs. 6. Opposing the petition, Mr. Gaurang Bhatt, learned Senior Standin .....

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bmitted that the revenue authorities have, within a period of three months from 11.12.2009 i.e. the date of the order passed by the Tribunal, granted refund for the period from 24.04.2005 to 02.06.2008 for the reason that the refund came to be sanctioned on 13.06.2011 and was transferred to the Consumer Welfare Funds. It was submitted that when the amount was already transferred to the Consumer Welfare Fund, the revenue is not liable to pay any other and further amount due for the period subsequ .....

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ces, the question of granting any compensatory costs does not arise. It was, accordingly, urged that the impugned order passed by the Tribunal being just, legal and proper, there is no warrant for interference and that the petition deserves to be dismissed. 7. The short question that arises for consideration is as to whether the petitioner is entitled to payment of interest for the period from 03.06.2008 to 10.03.2010 and as to whether the petitioner is entitled to any compensatory costs for lat .....

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section, there shall be paid to that applicant interest at such rate, not below five per cent, and not exceeding thirty per cent, per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty. Thus, on a plain reading of the provisions of section 11BB of the Central Excise Act, it is evident that t .....

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005 to 02.06.2008 and the interest from 03.06.2008 till the date of actual payment i.e. 10.03.2010 was not paid on the ground that such amount had been transferred to the Consumer Welfare Fund pursuant to the order passed by the Commissioner (appeals). 9. Under section 11BB of the Central Excise Act, there is an obligation upon the respondents to pay the interest at the prescribed rate immediately after the expiry of three months from the date of receipt of such application till the date of refu .....

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cation till the date of actual payment. The statute does not provide for curtailment of the period for which the interest has to be paid on account of any superwinning circumstances, like transfer of the amount to the Consumer Welfare Fund. The learned counsel for the respondents is not in a position to point out any provision of law which shows that when the amount is transferred to the Consumer Welfare Fund, the period for which the assessee would be entitled to interest under section 11BB of .....

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ncing from a period after three months from the date of application till the date of actual refund. The reason is not far to see, namely, that a party should not be prejudiced on account of any delay in deciding the application or on the ground that the party might have to challenge the order of refund before any other forum. As regards the transfer of the amount to the Consumer Welfare Fund, it is evident that the order passed by the Commissioner (Appeals) holding that there was unjust enrichme .....

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