Facts of the case
The Appellant has filed refund claim with the department. Although the refund claim was allowed by the Adjudicating Authority but the same was credited to theConsumer Welfare Fund on the ground of unjust enrichment. The dispute ultimately landed in the Tribunal and theTribunal remanded the matter for denovo adjudication on the issue of unjust enrichment. After the denovo adjudication, the adjudicating authority sanctioned the refund claimed by the appellant but the same was credited by the department to the consumer welfare fund. Thereafter, the appellant filed the claim for interest on delayed payment of refund claim as per Section 11 BB of the Central Excise Act, 1944. Further, a show cause notice was issued to the Appellant rejecting the claim of interest. Ultimately the tribunal settled the issue and held that the Appellant is entitled to claim interest after three months from the date of filing of refund claim till its realisation. Since again there was inordinate delay in refund of interest to the Appellant therefore the Appellant has to file another refund claim for refund of interest for delay in refunding the interest to the Appellant on the ground that the interest on delayed refund was immediately payable alongwith the refund amount but was actually paid later.
Another show cause notice was issued to the Appellant as to why the refund ofinterestshould not be rejected. The Adjudicating Authority vide order rejected the interest claim of the Appellant andthe same was upheld by the learned Commissioner.
Contention of the Appellant
The interest became due earlier and since the amount of interestwas received by the Appellant after several years, the revenue has withheld the refund of interest without any authority of law due towhich the appellant had to incur expenses in an avoidable litigation for not getting its legitimate dues. Thus the Appellant is entitled forinterest on interest of refund.
Contentions of the department
There is no provision under law for payment of interest on interest amount and hence it cannot be granted.
Judgment of the Tribunal
While passing on the judgment the tribunal relied upon the following cases:
The Hon’bleGujarat High Court has held that although there is no provision for payment of interest on the interest amount, but it would be payable at the same rate at which the excess amount carries interest.
The aforesaid decision was further followed by the Hon’ble High Court in another matter whereby it was held that the Revenue is liable to pay interest on the amount of interest which it should have paid to the assesee but has unjustifiably failed to do so.
This view point of the Hon’ble High Court was upheld by the Hon’ble Supreme Court also and the Hon’ble SupremeCourt dismissed the Appeal filed by the department and held that the revenue is liable to payinterest on the amount of interest.
Tribunal also in a somewhat similar issue while allowing the Appeal filed by the assessee, has held as under:-
"The issue is no longer res integra and the Larger Bench of the Tribunal have clearly held that interest is required to be paid from the date of expiry of three months from the date of receipt of Final Order of the Tribunal till the date of payment. In this case, the appellant’s contentions that they are eligible for interest from three months from the date they becoming eligible for refund, as already calculated and paid to them. They have also relied on Larger Bench judgment rendered in the case of wherein it has been held that interest due to applicant has to be calculated on basis of application filed by them. In view of these judgments, the prayer of appellant for grant of interest as well as interest on interest is allowed. The original authority shall calculate the interest as well as interest on interest on interest and make the payment within one month from the receipt of this Order. Appeal is allowed on the above terms."
The decision of the Tribunal in Kerala Chemicals is applicable on the facts of this case since the same is in accordance with the decisions of the Hon’ble Supreme Court and the Hon’ble Gujarat High Court as mentioned in earlier paragraphs although these decisions have not been discussed in the aforesaid decision of the Tribunal.
Only because there is no provision for interest on refund of delayed interest that does not mean that there is any bar or prohibition for granting the same and therefore following the law laid down by the Hon’ble Supreme Court and the decisions of Hon’ble Gujarat High Court as well as the decision of the coordinate Bench of the Tribunal as aforesaid, appeal is consequently allowed.
1 M/s BSL LTDVs
2 D.J. Works vs. Dy. CIT; (1992) 195 ITR 227 (Guj.)
3 CIT vs. Narendra Doshi
4 Kerala Chemicals & Properties Ltd.
5Indian Thermoplastics (P) Ltd. Vs. C.C., Kolkata 2004 (164) E.L.T. 156 (Tri. – L.B.) 2 003-TIOL-234-CESTAT-DEL-LB
6Jayanta Glass Ltd. V. CCE, Kolkata – 2004 (165) E.L.T. 516 (Tri. – L.B.) = 2004-TIOL-355-CESTAT-DEL-LB
Interest on delayed payment of interest under Indirect taxation allowed even though there is no specific provisions in the law. The Tribunal replying on Apex Court judgement under different statute hold that even though there is no provision for interest on delayed interest, that does not mean that there is any bar or prohibition for granting the same
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