TMI Blog2022 (4) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Proper Officer under Section 54(5) within 60 days from the receipt of the application, interest at such rate not exceeding 6 per cent would become payable after the expiry of 60 days from the date of receipt of application till the date of refund of such tax. The proviso to said Section prescribes that where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and if the same is not refunded within 60 days from the date of receipt of an application filed consequent to such an order, the rate of interest payable would be 9 per cent. The instant cases have not arisen from any order passed by an Adjudicating Authority or Appellate Authority or Appellate Tribunal or Court and the cases are strictly within the scope of the principal provision of Section 56 and not under the proviso thereof. In light of these provisions, the question which arises for consideration is whether the High Court was justified in awarding interest at the rate of 9 per cent per annum. In GODAVARI SUGAR MILLS LTD. VERSUS STATE OF MAHARASHTRA ORS. [ 2013 (6) TMI 23 - SUPREME COURT] , a bench of two Judges of this Court cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IVIL APPEAL NOS. 2997-2998 OF 2022 (Arising out of Special Leave to Appeal (C) Nos. 7314-7315 - - - Dated:- 19-4-2022 - CIVIL APPEAL NOS.2995-2996 OF 2022 (Arising out of Special Leave to Appeal (C) Nos. 7312-7313 of 2022) @ Special Leave Petition (C) Diary No.27099 of 2020 CIVIL APPEAL NOS. 2997-2998 OF 2022 (Arising out of Special Leave to Appeal (C) Nos. 7314-7315 of 2022) @ Special Leave Petition (C) Diary No.28455 of 2020 Uday Umesh Lalit And S. Ravindra Bhat , JJ. For the Petitioner : Mr. N. Venkataraman, ASG Mr. Akshay Amritanshu, Adv. Mr. Merusagar Samantray, Adv. Ms. Indira Bhakar, Adv. Mr. Manish, Adv. Mr. M.K. Maroria, AOR Mr. B. Krishna Prasad, AOR For the Respondent : Mr. Ravi Bharuka, AOR Mr. Ankit Agarwal, Adv. JUDGMENT Uday Umesh Lalit, J. 1. Delay condoned. Leave granted. 2. Appeal arising out of Special Leave Petition (C) Diary No.27099 of 2020 is directed against the judgment and order dated 10.07.2019 passed by the High Court1 in Special Civil Application No.18591 of 2018 and against the order dated 13.03.2020 passed in Review Petition arising therefrom being Misc. Civil Application No.1 of 2019. (For facility, hereinafter referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 The petitioner states further that it received the refund of integrated tax paid on export of goods after substantial period of delay. Details of refund claimed, date of application of refund and actual date of grant of refund for the month of July is enclosed herewith and marked as Annexure-D 3.1 Details of 15 (Fifteen) refunds made to said writ petitioner showed that there was delay ranging from 94 to 290 days. 3.2 In the circumstances it was prayed inter alia:- a) to issue writ of mandamus and/ or any other appropriate writ(s) for directions is the Respondents for providing appropriate compensation as well as interest, for delay in the granting of refund; 4. The first case arises out of Special Civil Application No.18591 of 2018 filed by M/s. Willowood Chemicals Pvt. Ltd. submitting that said Writ Petitioner was entitled on the basis of Section 16 of the IGST Act read with Section 54 of the CGST Act for compensation in receipt of delayed payment as detailed in Annexure D of the petition, which in turn dealt with 12 refunds with delay ranging between 94 to 290 days. The special civil application had thus prayed for appropriate compensation. 5. In both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of the writ of this order. 7. The first case was then disposed of on the same day with the following observations:- 4. For the reasons assigned in the Special Civil Application No15925 of 2018, decided on 10/07/2019, this writ application is allowed to the extent that the writ applicants are entitled to the interest for the delayed payment at the rate of 9% per annum. The authority concerned shall look into the chart provided by the writ applicants, which is at Page 30, Annexure D to the writ application and calculate the aggregate refund, the writ applicants are entitled to 9% per annum interest from the date of filing of the GSTR38. The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards interest. Let this exercise be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The requisite amount towards the interest shall be paid to the writ applicants within a period of two months from the date of receipt of the writ of this order. 8. The appellant being aggrieved, preferred Review Petitions in both the cases. It was submitted inter alia: 4. It is respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied. *** *** *** 20. Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act relating to, (i) scope of supply; (ii) composite supply and mixed supply; (iii) time and value of supply; (iv) input tax credit; (v) registration; (vi) tax invoice, credit and debit notes; (vii) accounts and records; (viii) returns, other than late fee; (ix) payment of tax; (x) tax deduction at source; (xi) collection of tax at source; (xii) assessment; (xiii) refunds; (xiv) audit; (xv) inspection, search, seizure and arrest; (xvi) demands and recovery; (xvii) liability to pay in certain cases; (xviii) advance ruling; (xix) appeals and revision; (xx) presumption as to documents; (xxi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1947, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) refund of tax paid on export of goods or services or both or on inputs or input services used in making such exports; (b) refund of unutilized input tax credit under sub-section (3); (c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued; (d) refund of tax in pursuance of section 77; (e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or (f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify. (8A) The Government may disburse the refund of the State tax in such manner as may be prescribed. (9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3). (2) relevant date means- (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or (ii) if the goods are exported by land, the date on which such goods pass the frontier; or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished; (c) in the case of services exported out of India where a refund of tax paid is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund. Explanation. For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under subsection (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5) 12. These provisions show that a registered person making export of goods outside India, is entitled in terms of Section 16 of the IGST Act to claim refund of either unutilized input tax credit of export of goods under bond or letter of undertaking or refund of integrated tax paid on export of goods. In terms of Section 20 of the IGST Act, any claim for refund is to be governed by the provisions of the CGST Act which would apply mutatis mutandis as if they were enacted in the IGST Act. The application for refund, therefore, is required to be preferred in accordance with Section 54 of the CGST Act. According to Section 56 of the CGST Act, if an applicant is not refunded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment orders on the ground of their illegality or unconstitutionality and, therefore, could take action under Article 226 for the protection of their fundamental right, and the courts, on setting aside the assessment orders, exercised their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realised. We do not find any good reason to extend this principle and, therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right. 7. The Court has emphasised that there was no legal right in the appellant who had filed the writ petition to claim the refund under the relevant statute. 8. In the present case also till the insertion of Section 27-A in the Act by Act 22 of 1995 there was no right entitling payment of interest on delayed refund under the Act. Such a right was conferred for the first time by the said provision. Act 22 of 1995 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inguished in several subsequent cases, including in U.P. Pollution Control Board v. Kanoria Industrial Ltd. [(2001) 2 SCC 549] and ABL International Ltd. v. Export Credit GuaranteeCorpn. of India Ltd. [(2004) 3 SCC 553] The legal position becomes clear when the decision in Suganmal [AIR 1965 SC 1740] is read with the other decisions of this Court on the issue, referred to below: (i) Normally, a petition under Article 226 of the Constitution of India will not be entertained to enforce a civil liability arising out of a breach of a contract or a tort to pay an amount of money due to the claimants. The aggrieved party will have to agitate the question in a civil suit. But an order for payment of money may be made in a writ proceeding, in enforcement of statutory functions of the State or its officers. (Vide Burmah Construction Co. v. State of Orissa [AIR 1962 SC 1320 : 1962 Supp (1) SCR 242] .) (ii) If a right has been infringed-whether a fundamental right or a statutory right-and the aggrieved party comes to the Court for enforcement of the right, it will not be giving complete relief if the Court merely declares the existence of such right or the fact that existing right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the State or its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. (Vide Sanjana M. Wig v. Hindustan Petroleum Corporation Ltd. (2005) 8 SCC 242) We are therefore of the view that reliance upon Suganmal was misplaced to hold that the writ petition filed by the appellant was not maintainable. 16. We, therefore, proceed to consider the merits. Turning to the basic question it must be noted that in the following cases, this Court dealt with the question as to payment of interest on the amount due by way of refund: (A) In Modi Industries Ltd. and another v. Commissioner of Income Tax and Another (1995) 6 SCC 396 a bench of three Judges of this Court was called upon to consider the effect of Section 214 of the Income Tax Act, 1961, and the questions which arose were set out as under: We shall now indicate how the controversy relating to the meaning of the expression regular assessment arises: an assessee pays advance tax according to his estimate of his income during the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of the order as a result of which excess realisation of tax became refundable. Interest under Section 243 or Section 244 was payable only when the refund was not made within the stipulated period upto the date of refund. But, if the assessment order was reduced in appeal, no interest was payable from the date of payment of tax pursuant to the assessment order to the date of the appellate order. Therefore, interpretation of Section 214 or any other section of the Act should not be made on the assumption that interest has to be paid whenever an amount which has been retained by the tax authority in exercise of statutory power becomes refundable as a result of any subsequent proceeding. (Emphasis supplied) (B) In Godavari Sugar Mills Ltd.7, a bench of two Judges of this Court considered the question whether interest on the compensation amount at the rate of 9 per cent per annum could be awarded when the terms of Section 6 of the Maharashtra Agriculture Lands (Ceiling of Holdings) Act, 1961 prescribed payment of interest only at the rate of 3 per cent per annum. The discussion on the point was: 9. There is considerable force in the submissions of Ms Madhav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount of compensation.-(1) The amount of compensation may, subject to the provisions of subsection (3), be payable in transferable bonds carrying interest at three per cent per annum. (2) The bonds shall be- (a) of the following denominations, namely- ₹ 50; ₹ 100; ₹ 200; ₹ 500; ₹ 1000; ₹ 5000 and ₹ 10,000; and (b) of two classes-one being repayable during a period of twenty yearsfrom the date of issue by equated annual instalment of principal and interest, and the other being redeemable at par at the end of a period of twenty years from the date of issue. It shall be at the option of the person receiving compensation to choose payment in one or other class of bonds, or partly in one class and partly in another. (3) Where the amount of compensation or any part thereof, cannot be paid in the aforesaid denomination, it may be paid in cash. (emphasis supplied) The said section contemplates the payment of compensation with interest at 3% per annum in annual instalments spread over a period of 20 years or at the end of 20 years. It also contemplates payment being made either by transferable bonds or in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508] and the order of reference. We have also considered the submissions made by the parties to the lis. 4. We would first throw light on the reasoning and the decision of this Court on the core issue in Sandvik case [Sandvik Asia Ltd. v. CIT, (2006) 2 SCC 508]. The only issue formulated by this Court for its consideration and decision was whether an assessee is entitled to be compensated by the Income Tax Department for the delay in paying interest on the refunded amount admittedly due to the assessee. This Court in the facts of the said case had noticed that there was delay of various periods, ranging from 12 to 17 years, in such payment by the Revenue. This Court had further referred to the several decisions which were brought to its notice and also referred to the relevant provisions of the Act which provide for refunds to be made by the Revenue when a superior forum directs refund of certain amounts to an assessee while disposing of an appeal, revision, etc. Since there was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 31(A) of the Constitution and whether they were violative of Article 300(A) of the Constitution? After dealing with these questions, the reference was answered thus: We, therefore, answer the reference as follows: (a) Section 110 of the Land Reforms Act and the Notification dated 8-3-1994 are valid, and there is no excessive delegation of legislative power on the State Government. (b) Non-laying of the Notification dated 8-3-1994 under Section 140 of the Land Reforms Act before the State Legislature is a curable defect and it will not affect the validity of the notification or action taken thereunder. (c) The Acquisition Act is protected by Article 31-A of the Constitution after having obtained the assent of the President and hence immune from challenge under Article 14 or 19 of the Constitution. (d) There is no repugnancy between the provisions of the Land Acquisition Act, 1894 and the Rocrich and Devika Rani Rocrich Estate (Acquisition Transfer) Act, 1996 (in short the Acquisition Act ), and hence no assent of the President is warranted under Article 254(2) of the Constitution. (e) Public purpose is a precondition for deprivation of a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The subsequent decision of the bench of three Judges in Gujarat Fluoro Chemicals6 noticed that the grant of interest at the rate of 9 per cent was in the facts of the case in Sandvik Asia Ltd.5 19. Since the delay in the instant case was in the region of 94 to 290 days and not so inordinate as was the case in Sandvik Asia Ltd.5, the matter has to be seen purely in the light of the concerned statutory provisions. In terms of the principal part of Section 56 of the CGST Act, the interest would be awarded at the rate of 6 per cent. The award of interest at 9 per cent would be attracted only if the matter was covered by the proviso to the said Section 56. The High Court was in error in awarding interest at the rate exceeding 6 per cent in the instant matters. 20. We, therefore, allow these appeals and direct that the original writ petitioners would be entitled to interest at the rate of 6 per cent per annum on amounts that they were entitled by way of refund of tax. Since the concerned amounts along with interest at the rate of 6 per cent per annum have already been made over to them, nothing further need be done in both the cases. 21. The instant Civil Appeals are thus allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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