TMI Blog1990 (7) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... of cops" and held it dutiable under Tariff Item 68 of the First Schedule to the Act. While it is not necessary to trace the course of proceedings, it is sufficient to state that on 1-8-1984 the Collector of Central Excise passed an order upholding the levy of duty on the said activity. The petitioner preferred an appeal before the CEGAT, which was allowed on 21-5-1986 and the matter remanded to Collector for fresh adjudication. The order dated 21-5-1986, was clarified by the Tribunal on 30-3-1987, which, according to the petitioner, clearly held the levy of duty on the aforesaid activity as impermissible and illegal. The petitioner says that in pursuance of the order of the CEGAT dated 21-5-1986 no further proceedings were taken by the Collector. 3. Be that as it may, the petitioner stopped paying duty with effect from 7-6-1986, the date on which he received the order of the Tribunal dated 21-5-1986. He also filed applications for refunding the amount of duty collected during the period 17-3-1981 to 7-6-1986. On 21-12-1987 the Assistant Collector issued a notice calling upon the petitioner to show cause why the refund claims filed by him be not rejected. On 28-1-1988 the Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed, the learned counsel contended that the petitioner must be awarded interest from the date illegal collection was made. 6. The learned Standing Counsel for the Central Government disputed the petitioner's claim for interest. He submitted that the main relief sought for in the writ petition was the refund of excise duty, which no longer survives in view of the fact that refund has been effected pending the writ petition. He submitted further that the writ petition itself is not maintainable since it was filed without availing the alternative remedy of appeal provided by the Act. Indeed, after filing the writ petition, the petitioner did file such appeals, and succeeded there. The further appeal filed by the department against the appellate orders was dismissed, soon whereafter the department effected the refund. He therefore, submitted that the writ petition cannot survive merely for the sake of recovering interest. According to him, the writ petition must be dismissed as having become infructuous. 7. At the outset, we must clarify that this is not a case where refund is being asked for as a result of any decision of this Court, or the Supreme Court, declaring a provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim for refund of any duty of excise shall be entertained". The validity of this Section, and in particular of Sub-Section (4), is not in question before us. The question how to reconcile the provision of this Section, in particular the provisions contained in sub-section (4), with the mandate of Article 265 of the Constitution of India, also does not arise for consideration in this case. Indeed, the claims for refund were filed within the period prescribed by Section 11-B, and the only ground upon which they were rejected by the Assistant Collector was that the petitioner had not complied with the requirements of Rule 173-B while paying the duty. 9. The Act and the Rules made thereunder do not provide for payment of interest in case of refund of duty. We must presume that Parliament advisedly did not provide for the same, while enacting Section 11-B in 1978. The fact that Section 243 and 244 of the Income-tax Act provide for payment of interest by the Government on tax refunded shows that where the Parliament wanted to provide for such interest, it did provide therefor expressly. The omission to provide for interest under this Act must, therefore, be held to be deliberate. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the caption "equitable right to interest", "In equity interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor, such as mortgagor and mortgagee, obligor and obligee on a bond, personal representative and beneficiary, principal and surety, vendor and purchaser, principal and agent, solicitor and client, trustee and beneficiary, or where the debtor is in a fiduciary position to the creditor. Interest is also allowed on pecuniary legacies not paid within a certain time, on the dissolution of a partnership, on the arrears of an annuity where there has been misconduct or improper delay in payment, or in the case of money obtained or retained by fraud. It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law, or has wrongfully prevented the plaintiff from doing something which would have so entitled him." In U.S.A., there does not appear to be any decision of the Supreme Court. Among the State Courts, there appears to be a conflict of opinion. In 72 American Jurisprudence (2nd) para 1068 (1974 edition), the following statement occurs:- "Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is so liable." 12. Assuming that the situations stated in Halsbury are not exhaustive, we do not see any equity in favour of the petitioner, which should impel us to grant him interest. The levy on repairing of cops was held to be untenable by the order of the CEGAT dated 21-5-1986 as clarified on 30-3-1987. But his right to refund was subject to compliance with Rule 173-B. On that aspect, there was a controversy, which was settled by the Appellate Collector's order dated 12-5-1988 as affirmed by CEGAT on 29-3-1989. Within about 7 months, refund was made. It cannot be said in the circumstances that there was any unreasonable delay. It should also be seen that the petitioner has not set out any circumstances, much less established them, attracting the equitable jurisdiction of this Court. Indeed, we must presume that he has passed on the burden to the consumer-customer. He has not stated that he has not done so. If so, it must be held that he has not suffered any loss himself. Merely to say that because he was deprived of money does not per se entitle him to interest. On such a plea simpliciter, even a civil court would not be able to award interest for the period prior to inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of this Court under Article 226 of the Constitution. With great respect, we are unable to accept the principle of the said decisions. It is too widely stated. The grant of interest is not an automatic or necessary consequence of order of refund. It depends upon the facts of each case. It lies within the discretion of this Court in a petition under Article 226 of the Constitution. 14. Now coming to the decisions of this Court, three of them are brought to our notice. In C.M.W.P. No. 1293 of 1988, disposed of on 24-2-1989 by a Bench comprising Om Prakash J. and one of us (R.K.Gulati, J.) it was held, applying the principle of the decisions of other High Courts, that "where the collection made by the Revenue is unauthorised, without an authority of law, on the refund thereof the payment of interest is a necessary consequence to the person entitled to the refund. The principle underlying such decision is that the payment of interest is a compensation for the use or retention of another's money. To put it differently, interest is a sort of compensation, which is paid to the other party because the latter has deprived of the legitimate use of the amount which rightly belonged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed by the Tribunal. The same obligation was reiterated by the department in Instruction No. 156/1986 (Judl), 15/86 dated 20-8-1981 issued in that behalf. It would have been better had the department owned interest liability in the said instructions whenever there was delay in refund solely on the part of the department. In view of the above authority, the contention of the Standing Counsel that no writ petition can lie under Article 226 for mandamus with regard to interest, in the absence of a statutory provision for the same, cannot be sustained..... The judgment in Life Insurance Corporation should be considered a landmark in injecting a sense of accountability in the functionaries of Government Departments, Public Sector Undertakings, etc. who by refusing to act on some pretext or other fail in their statutory duty and withhold the rightful claims of the public......." 16. The Bench, however, took care to qualify and clarify the above statements thus:- "Before concluding we hasten to add that we should not be taken to have laid down as an inflexible rule that whether there is a failure on the part of the taxing authorities to refund the duty held not to be leviab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, fails and is rejected." This decision must, however, be understood in the context of the facts of that case. Life Insurance Corporation is a commercial corporation, and it levies interest on delayed payments. For that reason, it was held, it must be made liable to pay interest itself in case of delayed payment by it. In para 23 of the Report the Supreme Court observed thus:- "The High Court relied on the fact that interest @ 15% per cent per annum is reasonable, in the present case, particularly in view of the fact that the LIC itself charges interest at that rate....." It is well known that LIC charges interest not only on delayed payment of premiums by the policy holders, but that it is engaged in advancing loans upon which it charges interest. The same cannot be said about the Central Excise authorities. Collection of tax/duty is not a commercial venture, and there is no provision in the Central Excise Act, or the Rules, providing for interest on delayed payment of duty. No doubt penalty is leviable, but not interest. In such a situation, it would not ordinarily be just or equitable to make the department liable to pay interest for delayed refund. We are, therefo ..... 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