Gujarat High Court
State Of Gujarat vs Doshi Printing Press....Opponent(S) on 9 February, 2015
Author: Jayant Patel
Bench: Jayant Patel, S.H.Vora
O/TAXAP/87/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 87 of 2015
With
CIVIL APPLICATION (OJ) NO. 84 of 2015
In
TAX APPEAL NO. 87 of 2015
With
TAX APPEAL NO. 88 of 2015
With
CIVIL APPLICATION (OJ) NO. 83 of 2015
In
TAX APPEAL NO. 88 of 2015
With
TAX APPEAL NO. 100 of 2015
With
CIVIL APPLICATION (OJ) NO. 124 of 2015
In
TAX APPEAL NO. 100 of 2015
With
TAX APPEAL NO. 103 of 2015
With
CIVIL APPLICATION (OJ) NO. 137 of 2015
In
TAX APPEAL NO. 103 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE JAYANT PATEL
and
HONOURABLE MR.JUSTICE S.H.VORA
===========================================================
1 Whether Reporters of Local Papers may be allowed to see Yes
the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
Page 1 of 18
O/TAXAP/87/2015 JUDGMENT
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ? No
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STATE OF GUJARAT....Appellant(s)
Versus
DOSHI PRINTING PRESS....Opponent(s)
================================================================
Appearance:
MR CHINTAN DAVE AGP for the Appellant(s) No. 1
================================================================
CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL
and
HONOURABLE MR.JUSTICE S.H.VORA
Date : 09/02/2015
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE JAYANT PATEL)
1. As in all the appeals, common question arises for consideration, they are being considered simultaneously.
2. In all matters, the Revenue has preferred the appeal mainly on the following question of law:-
"Whether the Hon'ble Tribunal has erred in holding that the dealer is entitled to interest under Section 54(1)(aa) on the refund arising from the appellate order?"
3. We have heard Mr.Dave, learned A.G.P. appearing in all the appeals.
4. The common facts in the appeals are that the Assessee Page 2 of 18 O/TAXAP/87/2015 JUDGMENT has succeeded in the proceedings of the first appeal before the Appellate Authority and the Appellate Authority has ordered for refund of the tax amount. However, as the interest was not awarded on such refund of the tax amount, the Assessee preferred second appeal before the Tribunal. The Tribunal, after considering the aspect of reasonable construction of the provisions of Section 41 of the Gujarat Sales Tax Act (hereinafter referred to as the 'Act') and after taking into consideration the principles of doctrine of merger, found that when the interest on the amount of refund of tax upon the assessment is available, such interest should be made available on the refund of the tax which has accrued on account of the order passed in appeal against the assessment orders. We may, for the ready reference, record that the Tribunal relied upon its earlier view in case of M/s.Saurashtra Chemical Ltd. V/s. State of Gujarat in Second Appeal No.603 of 2007 decided on 01.08.2014 wherein, following observations were made by the Tribunal which are also the basis in all the impugned orders passed by the Tribunal. The same read as under:-
"(18) With regard to true nature and scope of section 54(1)(aa) of the Act, this Tribunal is of the view that the purpose of the provision is to grant interest on refund of excess money paid by the assessee.
Restriction is that interest is payable where assessment proceedings are carried out u/s 41 and not u/s 50 or any other provision. Assessment order is the result of assessment proceedings. The refund arises in appeal instead of original stage of assessment is covered within the expression "order of assessment u/.s 41". The phrase does not give restricted meaning as "original order of assessment u/s 41" or "order of assessment u/s 41 of the first assessing officer". If the legislature so intended it would have certainly added the word or words to give such restricted meaning. Therefore, provision must be read reasonably and full meaning must be given to the Page 3 of 18 O/TAXAP/87/2015 JUDGMENT words of statute as the object is to grant interest on the excess amount paid becomes refundable as a result of an original order of assessment passed by first assessing officer or corrected/modified order of assessment passed in appeal."
(19) "In the opinion of this Tribunal, the assessment order passed u/s 41 includes original order passed by first assessing authority as well as modified assessment order in appeal. Under an appeal the jurisdiction of the original order appealed against is exercised and therefore the order passed in appeal is corrected/modified order under the provision under which the appealed order is passed. The order passed in the appeal against original assessment order u/s 41 is assessment order u/s 41 and the original order of assessment merges in it. The intention of the legislature cannot be presumed that the refund arises at the first stage of assessment is only eligible for interest and orders of assessment passed at subsequent stages resulted into refund are not entitled to interest. Appeal proceedings are continuing single proceedings of assessment. Therefore, order passed in appeal is an order of assessment u/s 41. The intention is of paying interest on refund arises in order of assessment u/s 41 and the modified assessment order passed in appeal is also covered under the clause (aa). The close scrutiny of clause (aa) reveals that the dealer is eligible for interest on refund arises in the assessment proceedings carried out u/s 41 of the Act. It is further held that the appeal is continuing proceedings of assessment and therefore the provisions applicable to the original order of assessment are also applicable to the modified order of assessment. The restricted meaning of the word "an order of assessment u/s 41" will create discrimination between the situations of the matters of similar facts, one gets refund in original stage of assessment and another gets refund in appeal. The Hon'ble Supreme Court held that the interpretation, which leads discrimination, must be avoided. The restricted interpretation will give discretion to the first assessing authority to make available the interest to the assesses. Similar situation will take place in appeal, if the appeal is decided by remand to the first assessing authority who passes the order of assessment in form 39 following the direction and refund arises, the dealer is entitled to interest. However, instead of remanding the matter, the Page 4 of 18 O/TAXAP/87/2015 JUDGMENT appellate authority decides the matter in appeal and passes modified order of assessment the appellant will be prevented from interest even though he gets refund. The interpretation, which makes the provisions unworkable, should be avoided. if the phrase "assessment order u/s 41 " is not interpreted reasonably and the narrow and restricted meaning as "original assessment order" is given, considerable chaos, confusion, uncertainty and conflict would arise. The legislature never intends to deprive the assesses from entitlement where refund does not arise because of the erroneous original assessment order which modified in appeal and resulted in to refund. The appellant cannot be put to loss for the mistake of the first assessing authority or for the reasons beyond control of the appellant. The narrow and restricted meaning will defeat the purpose of clause (aa) for which it is inserted. The accepted principle in interpreting a provision is that a construction, which would defeat its purpose, should be avoided. Even if more than one construction is possible that which preserves its workability and efficiency should be preferred to the one. which would render it otiose or sterile. "
(23) It is therefore, held that power to grant interest u/s 54(1)(aa) of the Act is liable to be exercised by every authority who has jurisdiction to deal with assessment in one way or another, and at one time or another. It is not confined strictly to the assessment authority alone as a prescribed authority. The appellant authority has also jurisdiction to allow interest at the appellate stage. The appellate authority is in continuation of the assessing authority and it can exercise such powers conferred u/s 54(1)(aa) of the Act. The term order of assessment should not hold any restricted meaning of assessment only. Provisions made u/s 54(1)(aa) of the Act are benevolent provisions and they are inserted by the legislature with a view to compensate the financial loss to be incurred to assessee. Only with a view to prevent the future default and to make the assessee absolutely free about his tax liability, the provision has been inserted. Passing of appellate order is merely a rectification or correction in original order. It is simply a merger as there cannot be more than one operative order governing the same subject matter. The strict interpretation of section 54(1)(aa) as was done earlier by this Tribunal leads to manifest unjust result which Page 5 of 18 O/TAXAP/87/2015 JUDGMENT could never have been intended by the State Legislature and therefore, it is necessary to put a construction which modifies the meaning of the words used in section 54(1)(aa) of the Act so as to grant interest even if, refund becomes due to a dealer as a result of order passed in appeal or revision.
24) "We are mindful of the fact that the department has heavily relied on the decision of this Tribunal in the case of M/s Gayatri Tiles vs State of Gujarat wherein this Tribunal has given strict meaning to the words "by virtue of an order of assessment u/s 41"
and held that the said clause u/s 54 was inserted by Gujarat II Act of 1993, so, when the refund has arisen in appeal then the appellant is not entitled to interest as seen from the wording of section 54 of the Act. With respect, the said ratio laid down by this Tribunal does not seem to be correct in view of the above discussion and also in view of the fact that the provisions relating to interest on delayed payment of refund have been consistently held as beneficial and non--discriminatory. It is, therefore, held that the appellant is entitled to the interest on delayed payment of refund, irrespective of the fact whether such interest is payable by virtue of an order of assessment or even by virtue of an order passed in appeal or revision. It is, therefore, held that in case of M/s Mahavir Expo Chem Ltd. vs State of Gujarat, this Tribunal vide its order dated 22/4/02 passed in SA No. 335 & 336 of 2006 has adopted a very narrow meaning of the word used in section 54(1)(aa) of the Act and held that the entitlement of interest u/s 54 is from 1/4/93 and only on such refund amount which has arisen in the assessment order u/s 41 of the Act and not at the appellate stage. With respect, this is not correct proposition of law and it cannot be considered as binding precedent."
5. It is true that the Tribunal, earlier, in case of M/s Gayatri Tiles V/s. State of Gujarat had taken the view that when the refund has arisen in the appeal, the appellant would not be entitled to interest as seen from the wording of Section 54 of the Act but, it also appears that the very view has been considered by the Tribunal in the present impugned orders and the Tribunal has not concurred with the earlier view and has Page 6 of 18 O/TAXAP/87/2015 JUDGMENT taken the view that interest on refund would be available to the appellant, if the amount of tax is to be refunded.
6. In our view, if principle of consistency in the orders passed by the Tribunal is to be maintained, one may at the first brush find that the earlier view taken by the Tribunal in case of M/s.Gayatri Tiles (supra) was binding to the Tribunal in the subsequent decision and, therefore, the Tribunal in the impugned orders, could not have taken the another view including the view taken in case of M/s.Saurashtra Chemical Ltd. (supra).
7. The learned A.G.P. submitted that the view taken by the Tribunal in case of M/s.Saurashtra Chemical Ltd. (supra) which is relied upon by the Tribunal in the impugned orders, is also challenged by the State Government subsequently as per the decision of the State Government but, as there is long delay, the application is yet to be heard for condonation of delay and the matter is yet to be circulated.
8. In our view, when there are two different views of the Tribunal, one for entitlement of interest on the appellate order and another for non-entitlement of interest on the appellate order for refund, we may instead of examining the aspect of consistency to be observed by the Tribunal, we may further examine the aspect as to whether the subsequent view taken by the Tribunal in case of M/s.Saurashtra Chamical Ltd.(supra) or the earlier view taken in case of M/s.Gayatri Tiles (supra) is appropriate or not?.
9. The learned A.G.P. contended that as per the provisions of Page 7 of 18 O/TAXAP/87/2015 JUDGMENT Section 54(1)(aa) of the Act, there is reference upon the assessment order and, therefore, it cannot be interpreted to mean that the refund on account of the appellate order is arising from the assessment order and he submitted that in view of the clear language of the statute, the Tribunal ought not to have departured from the earlier view taken by it in case of M/s.Gayatri Tiles (supra). The learned A.G.P. further contended that unless there is a specific provision providing for entitlement of interest on refund on account of the appellate order, no interest would be available since equity has no role to play in taxation matter. He submitted that there is no express provision made for entitlement to the interest to the Assessee on account of refund due to appellate order passed by the appellate Authority and, therefore, even otherwise also, the Tribunal has committed error in awarding interest on the refund of the amount of tax ordered by the Appellate Authority.
10. In our view, once an order is passed by the competent authority for assessment and the appeal is preferred before the Appellate Authority against such order of assessment, and the Appellate Authority modifies the order of assessment, the principles of doctrine of merger would squarely apply. Once the order of assessment merges with the order of the Appellate Authority in appeal, one may say that the assessment is finalized by the Appellate Authority in the appeal. Same would be the situation if such circumstances arise in the Second Appeal or in any further appeal, expressly provided by the statute and the order of assessment of assessing authority or the first Appellate Authority is modified. One may say that the consequence in law would be the assessment made by the first authority and further modified by the first Appellate Authority and further modified by the second Appellate Authority or the third Appellate Authority as Page 8 of 18 O/TAXAP/87/2015 JUDGMENT 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.
11. 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.
12. It is true that in taxing statute, principles of equity may have little role to play but at the same time, any statute in taxation matter should also meet with the test of constitutional provision.
13. In addition to the above, the principles of compensatory measure may apply if the taxing statute is silent about the said aspect. The Legislature may control quantification of interest or the entitlement of interest on refund subject to meeting with the test of constitutional provision. But, when the legislature is silent about entitlement of interest on refund of the tax amount already paid by the citizen, the interest can be Page 9 of 18 O/TAXAP/87/2015 JUDGMENT considered by way of a compensatory measure. The reference may be made to the decision of the Apex Court in case of Sandvik Asia Ltd. V/s. Commissioner of Income Tax and others reported in (2006) 280 ITR 643 (SC) read with the subsequent decision of the Apex Court in case of Commissioner of Income Tax V/s. Gujarat Fluoro Chemicals reported in (2014)1 SCC 126 wherein, the Apex Court did maintain the aspect of interest by way of compensatory measure but did not approve the interest on such interest while considering the aspect of compensatory measure. At this stage, we may refer to the recent decision of this Court in case of Gujarat Flouro Chemicals Ltd. V/s. Commissioner of Income Tax and others in Special Civil Application No.12855 of 1994 decided on 30.01.2015 wherein, the matter was remanded by the Apex Court in view of its Larger Bench judgment in case of Gujarat Flouro Chemicals (supra). In the said matter, the contention was raised by the counsel for the Revenue that unless the interest was expressly provided on any amount of refund, interest cannot be awarded by way of compensation. After considering the said contention, this Court, in the abovereferred decision, at paragraph Nos.11 to 17 observed thus:-
"11. In the case of Sandvik Asia Limited Vs. Commissioner of Income Tax & Others (supra), it is true that the matter was pertaining to the payment of advance tax and the Apex Court also found that there was harassment and agony to the Assessee, but on the aspect of compensation to the Assessee, the Apex Court, in the said decision under the head as to whether on general principles the Assessee ought to have been compensated for the inordinate delay in receiving monies properly due to it, has observed from paragraphs 75 to 81 thus:-
Whether on general principles the assessee ought to Page 10 of 18 O/TAXAP/87/2015 JUDGMENT have been compensated for the inordinate delay in receiving monies properly due to it?
Learned counsel for the appellant says that it cannot be denied that it has been deprived of the use of it's monies for periods ranging from 12 to 17 years. It also cannot be denied that such deprivation is solely due to the actions of the revenue which have been held by this Court to be contrary to the provisions of the Act, on general principles it ought to be compensated for such deprivation.
In the impugned order, the Bombay High Court has held that no compensation is required to be paid since" ... there was a serious dispute between the parties, which was ultimately ordered to be paid pursuant to the order passed by this Court on 30.04.1997. Undisputedly, the amount pursuant thereto was paid on 27.03.1998. ..."
The Court further held that since the amount was paid once the controversy was resolved there was no wrongful retention of monies. No authority can ever accept an obligation to make payment and simply refuse to pay. In each and every case an authority must at least claim to act in accordance with law and hence claim it has no obligation to pay for some reason or another. When the claims of the authority are found to be unsustainable or erroneous by the Courts it follows that the authority has acted wrongfully in the sense of not in accordance with law and compensation to the party deprived must follow. If the decision of the High Court is upheld it would mean that there can never be any wrongful retention by an authority until this Court holds that their stand is not in accordance with law. Therefore, that on this issue as well, the impugned judgment cannot be sustained and ought to be reversed.
In the present context, it is pertinent to refer to the Circular on Trade Notice issued by the Central Excise Department on the subject of refund of deposits made in terms of Section 35F of the Central Excise Act, 1944 and 129E of the Customs Act, 1962. The Circular is reproduced hereunder:
"Refund/Return of deposits made under Section 35F of CEA, 1944 and Section 129E of Customs Act, 1962 - Clarifications The issue relating to refund of predeposit made during the pendency of appeal was discussed in the Board Meeting. It was decided that since the Page 11 of 18 O/TAXAP/87/2015 JUDGMENT practice in the Department had all along been to consider such deposits as other than duty, such deposits should be returned in the event the appellant succeeds in appeal or the matter is remanded for fresh adjudication.
2. It would be pertinent to mention that the Revenue had recently filed a Special Leave Petition against Mumbai High Court's order in the matter of NELCO LTD, challenging the grant of interest on delayed refund of predeposit as to whether :
(i) the High Court is right in granting interest to the depositor since the law contained in Section 35F of the Act does in no way provide for any type of compensation in the event of an appellant finally succeeding in the appeal, and, (ii) the refunds so claimed are covered under the provisions of Section 11B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under Section 35F of the Central Excise Act, 1944.
The Hon'ble Supreme Court vide its order dated 26112001 dismissed the appeal. Even though the Apex Court did not spell out the reasons for dismissal, it can well be construed in the light of its earlier judgment in the case of Suvidhe Ltd. and Mahavir Aluminium that the law relating to refund of predeposit has become final.
3. In order to attain uniformity and to regulate such refunds it is clarified that refund applications under Section 11B(1) of the Central Excise Act, 1944 or under Section 27(1) of the Customs Act, 1962 need not be insisted upon. A simple letter from the person who has made such deposit, requesting the return of the amount, along with an attested Xerox copy of the order in appeal or CEGAT order consequent to which the deposit made becomes returnable and an attested Xerox copy of the Challan in Form TR6 evidencing the payment of the amount of such deposit, addressed to the concerned Assistant/Deputy Commissioner of Central Excise or Customs, as the case may be, will suffice for the purpose. All pending refund applications already made under the relevant provisions of the Indirect Tax Enactments for return of such deposits and which are pending with the authorities will also be treated as simple letters asking for return of the deposits, and will be processed as such. Similarly, bank guarantees Page 12 of 18 O/TAXAP/87/2015 JUDGMENT executed in lieu of cash deposits shall also be returned.
4. The above instructions may be brought to the notice of the field formations with a request to comply with the directions and settle all the claims without any further delay. Any deviation and resultant liability to interest on delayed refunds shall be viewed strictly.
5. All the trade associations may be requested to bring the contents of this circular to the knowledge of their members and the trade in general.
6. Kindly acknowledge receipt. [Source : M.F.(D.R.) F.No. 275/37/2KCX. 8A, dated 212002]" A close scrutiny of the contents of the Circular dated 2.1.2002 would disclose as to the modalities for return of predeposits. It again reiterated that in terms of the Supreme Court order such predeposit must be returned within 3 months from the date of the order passed by the Tribunal, Court or other fiscal authority unless there is a stay on the order of the fiscal authority, tribunal, court by a superior court. The Department has very clearly stated in the above circular that the delay beyond the period of 3 months in such cases will be viewed adversely and appropriate disciplinary action will be initiated against the concerned defaulting officers, a direction was also issued to all concerned to note that defaulter will entail a interest liability if such liability accrue by reason of any orders of the Tribunal/Court such orders will have to be complied with and it may be recoverable from the concerned officers. All the Commissioners were advised implementation of these instructions and ensure their implementation through a suitable monitoring mechanism. It is also specifically mentioned that the Commissioners under respective jurisdiction should be advised that similar matters pending in the High Courts must be withdrawn and compliance reported and that the Board has also decided to implement the orders passed by the Tribunal already passed for payment of interest and the interest payable shall be paid forthwith.
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 Page 13 of 18 O/TAXAP/87/2015 JUDGMENT 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 the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the date of refund of tax while they take the benefit of assesses funds by delaying the payment of interest on refunds without incurring any further liability to pay interest. This stand taken by the respondents is discriminatory in nature and thereby causing great prejudice to the lakhs and lakhs of assesses. Very large number of assesses are dversely affected inasmuch as the Income Tax Department can now simply refuse to pay to the assesses amounts of interest lawfully and admittedly due to that as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 197879, it has been deprived of an amount of Rs.40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and the rule of law.
COMPENSATION:
The word 'Compensation' has been defined in P. Ramanatha Aiyar's Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:
"An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of Page 14 of 18 O/TAXAP/87/2015 JUDGMENT his injury; the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the 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 Court has to take all relevant factors into consideration while awarding rate of interest on compensation.
13.In the latter decision of the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) at paragraphs 5, 6, and 7, it was observed and held as under:-
5. 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 be properly and adequately compensated and, therefore, in paragraph 51 of the judgement, the court while compensating the assessee had directed the Revenue to pay a compensation by way of interest for two periods, namely; for the assessment years 197778, 197879, 198182, 198283 in a sum of Rs.40,84,906 and interest at 9 per cent from March 31, 1986, to March 27, Page 15 of 18 O/TAXAP/87/2015 JUDGMENT 1998, and in default, to pay the penal interest at 15 per cent, per annum for the aforesaid period.
6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period.
7. As we have already noticed, in Sandvik case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest.
14.The aforesaid shows that in the latter decision of the Larger Bench, it was held that the decision in the case of Sandvik Asia Limited Vs. Commissioner of Income Tax & Others (supra) cannot be read to mean that Revenue is obliged to pay interest on interest in the event of its failure to refund the interest payable within the statutory period. The Apex Court 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 Page 16 of 18 O/TAXAP/87/2015 JUDGMENT 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 Larger Bench in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) it appears that the liability to pay interest on interest by the Revenue is not approved and to that extent the contention of the Revenue can be maintained. But the further contention of the Revenue that no interest whatsoever would be payable if the refund of the amount of tax or refund of the amount deposited towards tax is to be made, no interest whatsoever would be available by way of compensatory measure.
17.In our view, the general principles for awarding compensation to the Assessee for the delay in receiving monies properly due to it is not disapproved by the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra)."
14. In our view, the abovereferred observation made by this Court in the abovereferred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learned A.G.P. that the interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same.
15. In view of the aforesaid observations and discussion, we find that the question raised could no more be considered as substantial question of law since such aspect is already covered by the principles of doctrine of merger well settled in the system of administration of justice and also in the abovereferred decision of the Apex Court as well as of this Court.
Page 17 of 18O/TAXAP/87/2015 JUDGMENT
16. When the Tribunal has taken the view in case of M/s.Saurashtra Chemical (supra) inconsonance with the abovereferred view taken by us and thereafter, if the Tribunal has made departure from its earlier view taken in M/s.Gayatri Tiles (supra), we do not find that the later view, which is supported by our view as well as the abovereferred decision of the Apex Court and of this Court, should be deprecated or further examined which is on the mere principles of consistency to be maintained by the Tribunal and we find that no useful purpose would be served in further examination thereto.
17. Under the circumstances, we find that no substantial question of law would arise for consideration in the present Tax Appeals, as sought to be canvassed.
18. Under the circumstances, we do not find any case for interference to the impugned orders passed by the Tribunal. Hence, all the appeals are meritless and, therefore, dismissed.
Order in OJCA Nos.84, 83,124 and 137 of 2015.
In view of the order passed in the respective main Tax Appeals, these Civil Applications(OJ) would not survive and disposed of accordingly.
(JAYANT PATEL, J.) (S.H.VORA, J.) Hitesh Page 18 of 18