TMI Blog2018 (10) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the entire period after passing of the appellate order, but would be entitled to such additional interest after introduction of the relevant statutory provisions w.e.f 1st June 2016 in terms of the observations made in this judgment. [ii] The petitioner cannot claim any further interest or compensation over and above the statutory interest prescribed. However, looking to long delay which has clearly remained explained in giving effect to the appellate order, the respondent shall pay cost of ₹ 1,00,000/= [rupees one lakh] to the petitioner. [iii] It is expected that the concerned Assessing Officers would pass necessary orders giving effect to the appellate or revisional orders in case of petitioner and other group entities as expeditiously as possible. We expect that the Revenue would not drive the petitioner to unnecessary litigation in this respect. - R/SPECIAL CIVIL APPLICATION No. 7073 of 2018 - - - Dated:- 3-10-2018 - MR AKIL KURESHI AND B.N. KARIA, JJ. For The Petitioner (s) : Mr B S SOPARKAR, Advocate For The Respondent (s) : MRS MAUNA M BHATT, Advocate ORAL JUDGMENT ( PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) as far back as on 5th March 2009. On 8th March 2018, the Assessing Officer passed an order which was tittled as Order giving appeal effect of CIT (A) . In such order, he noted that the CIT (A) is the said order had granted total relief to the assessee to the tune of ₹ 3,40,62,302/=. Accordingly, he revised the petitioner's net tax liability for the said AY 20042005. In the concluding portion of the order, he recorded that the assessee had requested to give credit of the refund amount of ₹ 97,41,109/= adjusted on 29th March 2008. He further observed that the credit of such amount is not given as the same is not reflecting on ITD . The petitioner, therefore, once again wrote to the Department pointing out that the request for giving credit of the said sum of ₹ 97,41,109/= and refund of the excess tax is pending since long. The petitioner had also submitted an indemnity bond for receiving the same. The request for refund was rejected only on the ground that the same was not reflected in the system of the Department. The petitioner, therefore, requested that necessary steps be taken to enable the petitioner to receive the refund. Til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t retain such amounts which would be without authority of law. On the other hand, Department resisted the petition contending that there was no willful delay in granting the refund. The refund has been granted with statutory interest. Initially, the Department had challenged the order of Appellate Commissioner before the Tribunal. Thereafter, further appeal has been filed before the High Court which is pending. Counsel for the Department had further argued that the Nirma Group of assesses have created multiple trusts, companies and subsidiaries. Interconnection with such assesses and liability of individual assesses for several years have to be minutely examined before clearing the refund claims. He argued that interest under the newly inserted subsection [1A] of Section 244A cannot be granted retrospectively since the legislature has made the provision prospective. We would first address the petitioner s grievance of undue delay in granting the refund. We may recall that after the Assessing Officer passing order of assessment on 29th December 2006 making substantial additions, raising tax demands, a sum of ₹ 97.41 lakhs [ rounded off ] was recovered through adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient to cover a period of nine years. What ever tax structure of the petitioner and the group entities and whatever Department s resource limitations be, the delay of nearly nine years in granting the refund simply cannot be explained away. This brings us to the claims of the petitioner. In this context, learned counsel Shri Soparkar had made two principal claims one was that additional interest under subsection [1A] of Section 244A of the Act should be granted. He argued that this provision was inserted by the legislature by way of a remedial measure and should therefore be applied to all pending cases, even those which might have arisen prior to enactment of such section. His second prayer was to grant compensation for long delay in granting refund. He contended that though the Supreme Court in the case of Gujarat Flourochemicals Ltd. v. Commissioner of IncomeTax Ors ., reported in [2015] 377 ITR 307 [Guj.] had disapproved the claim of interestoninterest, had not held that the compensation for delay in giving refund cannot be ordered. In this context, we may refer to the relevant statutory provisions. Section 244A of the Act pertains to Interest on refunds . S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner : Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order : Provided further that where an order under section 250 or section 254 or section 254 or section 260 or section 262 or section 263 or section 264 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order under section 250 or section 254 or section 260 or section 262 of section 263 or section 264 shall be made within the time specified in subsection (3). We may note that in the earlier form, Section 153 of the Act did not contain a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner or Commissioner, or passed by the revisional authority; as the case may be. Proviso to subsection (5), however, provides that where it is not possible for the Assessing Officer to give effect to such order within such time, for reasons beyond his control, the Principal Commissioner or Commissioner, on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order. The further proviso to subsec. (5) provides that where an appellate or revisional order requires verification of any issue by way of submission of any document by the assessee or any other person, or where an opportunity of being heard is to be provided to the assessee, the order giving effect to such order shall be made within the time specified in subsec. (3). Subsection (3) in turn provides for a time limit for passing fresh assessment pursuant to appellate or revisional order by prescribing time limit of nine months from the end of financial year in which the order under section 254 is received, or order under section 263 or section 264 is passed. Analysis of subsection (5) of Section 153 would show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... somewhat detailed analysis of the statutory provisions was necessary in order to ascertain whether the provisions are meant to be applied prospectively or retrospectively. It is well settled that a statutory amendment making substantive changes would have prospective effect unless either expressly or by necessary implications, the legislature has provided for retrospective operation thereof. In his book Principles of Statutory Interpretation , Justice GP Singh refers to observations of Frankfurter in his article Some reflections on the Reading of Statutes , wherein, it is observed that, Legislation has an aim, it seeks to obviate some mischief, to supply and indequacy, to effect a change of policy, to formulate a plan of government. That aim, that policy is not drawn, like nitrogen, out of the air, it is evidenced in the language of the statute, as read in the light of other external manifestations of purpose . Though it is well settled that statutes dealing with substantive rights are prima facie prospective, unless it is expressly or by necessary implication made to have retrospective operation, such rigors are not recognized by the Courts when it comes to dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal points the beginning point is the end of the period beginning from the date following the date of expiry of time allowed under section (5) of Section 153 and the end point of computing the interest would be the date on which refund is granted. Applying such provisions for the past period would immediately throw a question as to from which date such interest liability would arise. For the past period, there being no provision in subsection (5) of Section 153 laying time limits, the computation of beginning of the period for granting interest would be unworkable. Claim of interest for the past period cannot be accepted for want of any machinery provided by the legislature to calculate such interest. The legislature therefore by necessary implications did not desire to give any retrospective effect to these provisions. The claim for additional interest therefore cannot be granted for the periods when the provisions of Section 244A [1A] and 153 [3] as they stand now were not in statute book at all. There would however be a caveat to this proposition and it is this. There may be cases where the appellate or revisional order may have been passed long before 1st June 2016. Till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also independent of the additional interest under subsection [1] of Section 244A. This judgment has a short history, which we may record. As is wellknown, the Supreme Court in the case of Sandvik Asia Limited v. Commissioner of Incometax Ors ., reported in [2006] 280 ITR 643 [SC] had an occasion to consider a situation in which the advance tax paid by the assessee became refundable pursuant to an appellate decision. The principal was refunded but refund of interest was withheld for a long time. The Supreme Court posed a question to itself whether on general principles, the assessee ought to have been compensated for the inordinate delay for receiving monies properly due to it. It was noticed that the revenue has retained such monies of the assessee for the periods ranging from 12 to 17 years. The Court held that the revenue having unjustifiably withheld the refund for seventeen years without any reason, the assessee would be entitled to receive such amount with further interest. The larger Bench of the Supreme Court considered the question whether the decision in case of Sandik Asia Limited v. CIT [Supra] lays down the principle that interest on interest is payable when the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... govern the field. The Court was of the opinion that in case of Gujarat Flourochemicals Limited [Supra], the Supreme Court did not shut out the question of directing the Government to pay compensation for non payment of statutory interest. In this background, the Court gave suitable directions for payment of compensation. The situation therefore emerges is that as held by the Supreme Court in the case of Gujarat Flourochemicals Limited [Supra], whenever statute provides for interest on delayed refunds, the same would hold the field. Further, there cannot be any direction for payment of interest on interest. In the present case, the statute provides for interest on delayed refund in terms of subsection [1] of Section 244A of the Act. As and when applicable, newly inserted subsection [1A] of Section 244A provides for additional interest. The statutory provisions thus govern the situations where the interest on delayed refund would be paid as also the rate on which such interest is to be calculated. There cannot be any further direction for payment of interest over and above such statutory prescriptions. This is not a case where the principal refund is granted at one point of t ..... 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