TMI Blog2023 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... that view of the matter, the request on the part of the petitioner for the interest on the amount of delayed refund deserves to be allowed, following the decision in case of M/s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat [ 2018 (4) TMI 1669 - GUJARAT HIGH COURT] . The petitioner thus would be entitled to the interest on the delayed refund at the rate of 6% per annum - It is thus made clear in all the decisions which have been referred to hereinabove that when the doctrine of merger is borne in mind and when the statutory authority allows the appeal of an assessee, he gives legal shape to the contours of the matter which assessing authority should have adopted and therefore, the refund claim of the assessee would essentially arise from the order of assessment. The respondent No.3 is directed to pay interest to the petitioner at the rate of 6% per annum from 13.07.2009 till the date of actual refund on the principal amount of Rs.2,15,80,739/-, and not later than twelve weeks from the date of receipt of a copy of this judgment - petition allowed. - R/SPECIAL CIVIL APPLICATION NO. 22228 of 2022 - - - Dated:- 2-12-2022 - HONOURABLE MS. JUSTICE SONIA GOKANI And HONOUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter has been tagged with the other matters. 3. Notice for final disposal returnable on 01/12/2022. Learned AGP Ms.Pooja Ashar waives service of notice for respondent Nos.1 to 3. She drawn attention of the court to the fact that in Special Leave to Appeal No.30627 to 30629 of 2019, the court has granted the stay until further orders and the matter has been tagged with Special Leave Petition No.16117 of 2016 and Special Leave Petition (Diary) No.19516 of 2020 has also been tagged with the same on 22/01/2021. 3. Affidavit-in-reply is not filed on the ground that the matter is already covered by the decision of this very court. The point which is required to be considered is as to whether the respondent is required to be directed to pay the interest from 01.04.2005 till the date of actual refund on the total amount. 4. We have heard extensively the learned senior advocate, Mr.Soparkar assisted by the learned advocate, Mr.Moonal Davawala and learned AGP, Ms.Pooja Ashar. 5. The brief facts which are needed to be considered are as follow: 5.1 The petitioner is engaged in the business of manufacturing and selling paints, varnishes, thinners, chemicals, etc. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest shall be payable for the period from the date of closure of such accounting year to the date of payment of such amount: PROVIDED FURTHER that no interest shall be payable on the amount of refund which does not exceed rupees one hundred. Explanation : For the purposes of this clause, the expression specified year means - (i) the financial year commencing from the 1st April, 1993; (ii) the calendar year commencing from the 1st January, 1993; (iii) Samvat year 2049 commencing from the Kartak sud akam, or (iv) co-operative year commencing from 1st October, 1993, or (v) any such year thereafter. (a) where an amount required to be refunded by the Commissioner to any person by virtue of an order of assessment under section 41 is not so refunded to him with in a period of thirty days of the date of order, or (b) where an amount required to be refunded by the Commissioner to any person by virtue of any other order made under this Act is not so refunded to him within a period of ninety days of the date of the order, the State Government shall pay to such person simple interest at twenty four per cent per annum on the said amount from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or where an application has been made to the Tribunal to refer any question of the law to the High Court interest shall not be payable. If the delay in granting the refund is attributable to the dealer wholly or in a part, then that period shall be excluded so far as the interest is concerned. 7. Section 38 of the Gujarat Value Added Tax Act, 2003 ( the GVAT Act hereinafter) also provided for the interest on the refund, which speaks this wise. 38. Interest on refund. Where refund of any amount of tax becomes due to the dealer by virtue of an order of assessment under section 34, he shall subject to the provision of this section be entitled to receive in addition to the amount of tax, simple interest at the rate of six per cent per annum on the said amount of tax from the date immediately following the date of the closure of the accounting year to which the said amount of tax relates till the date of payment of amount of such refund: Provided that where the dealer has paid any amount of tax after the closure of the accounting year and such amount is required to be refunded, no interest shall be payable for the period from the date of closure of such accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute, the principles of equity though may have a little role to play, but, at the same time, any statute in taxation matter should also meet with the test of constitutional provision. 8.2 This had been also followed in case of State of Gujarat vs. Unjha Pharmacy, reported in [2016] 341 ELT 211 (Guj.) as well as in M/s.Syngenta Crop Protection Pvt. Ltd. vs. State of Gujarat in (Special Civil Application No.23287 of 2017). 8.3 Relevant findings and observations in case of State of Gujarat vs. Unjha Pharmacy (supra) are reproduced thus: The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30.04.1997. Interest on delayed payment of refund was not paid to the appellant on 27.03.1981 and 30.04.1986 due to the erroneous view that had been taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer. There cannot be any doubt that the award of interest on the refunded amount is as per the statute provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute, such provision has to govern the field. Therefore, the Court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. (Emphasis supplied) 12. The aforesaid shows that in the above referred decision, the Apex Court did maintain that the interest on the amount of refund, if provided by the statute, such would govern the field, but the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt further held that in the peculiar facts and circumstances of the case of Sandvik Asia Limited Vs. Commissioner of Income Tax Others (supra) the Court had come to the conclusion that there was inordinate delay on the part of the Government to refund certain amount, which includes statutory interest and, therefore, directed the Revenue to pay compensation for the same, but not interest on interest. 15.In our view, as per the above referred observations of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra), obligation on the part of the Government to pay compensation for nonpayment of the statutory interest by way of interest on interest was not approved. Further, in the above referred decision of the Larger Bench of the Apex Court at paragraph 7, it was observed that the interest provided under the statute, which may be claimed by the Assessee from the Revenue would be available and interest on such statutory interest would not be available. 16.From the conjoint reading of the decision of the Apex Court in the case of Sandvik Asia Limited Vs. Commissioner of Income Tax Others (supra) and the latter decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of closure of such accounting year to the date of payment of such amount : Provided further that no interest shall be payable on the amount of refund which does not exceed rupees one hundred : [Explanation : For the purposes of this clause, the expression specified year means - (i) the financial year commencing from the 1st April 1993; (ii) the calender year commencing from the 1st January 1993; (iii) Samvat year 2049 commencing from the Kartak Sud Ekam; or (iv) Cooperative year commencing from 1st October 1993, or (v) any such year thereafter]. [(a) where an amount required to be refunded by the Commissioner to any person by virtue of an order of assessment under Section 41 is not so refunded to him within a period of thirty five days of the date of order, or (b) Where an amount required to be refunded by the Commissioner to any person by virtue of any other order made under this Act is not so refunded to him within a period of ninety days of the date of the order, the State Government shall pay to such person simple interest at nine percent per annum on the said amount from the date immediately following the expiry of the period specified in clause (a) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e third Appellate Authority as the case may be but, the ultimate determination of assessment is made by the Appellate Authority in appeal. Under these circumstances, it cannot be said that while giving effect to Section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification 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. 10. 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. 11. It is true that in taxing statute, principles of equity may have little role to play but at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to under sub-section (1) or in pursuance of any order by any court, shall subject to rules, be entitled to receive, in addition to the refund, simple interest at the rate of six percent [per annum on the amount of such refund from the date immediately following the date of closer of the accounting year to which the said amount of refund relates till the date of payment of amount of such a refund. The interest shall be calculated on the amount of refund due after deducting there from any tax, interest, penalty or any other dues under this Act, or under the Central Act. If, as a result of any order passed under this Act, the amount of such refund is enhanced or reduced, such interest shall be enhanced or reduced accordingly. [xxx] (2) Where the realization of any amount remains stayed by the order of any court or authority and such order is subsequently vacated, interest shall be payable also for any period during which such order remained in operation. In this section also, thus, there is a mandate for granting interest @ 6% per annum from the date of closure of the accounting year, or from the date of payment of the amount by the Dealer till the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts were recovered from the petitioners only in the month of February 2010, that is, long after the VAT Act was brought in force and that the petitioner cannot seek interest on the refund at the rate prescribed under the repealed Gujarat Sales Tax Act merely because the amount involved was in relation to a period when the Gujarat Sales Tax Act was in force. To that extent, the petitioner s contention was negatived. 9. It is thus clear that the petitioner would be entitled to the interest at the rate of 6% from the date from April 2005 till the date of actual refund on the amount of Rs.2,15,80,739/-(Rupees Two Crore Fifteen Lakh Eighty Thousand Seven Hundred Thirty-nine Only). The petitioner had filed the appeal before the Gujarat Value Added Tax Tribunal on 11.12.2017 and the judgment was passed in case of M/s. Sygenta Crop Protection Pvt. Ltd. vs. State of Gujarat (supra) on 19.04.2018 and the petitioner s case was decided on 07.02.2019. 10. The only aspect that requires to be considered is that the similar such issue had been challenged before the Apex Court by way of Special Leave to Appeal Nos.30627 and 30629 of 2019 by the State of Gujarat in case of Voltas Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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