Custom, Excise & Service Tax Tribunal
Suryauday Spinning Mills Pvt. Ltd. vs Secunderabad - G S T on 29 April, 2025
(1)
E/30367/2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - I
Excise Appeal No. 30367 of 2024
(Arising out of Order-in-Appeal No. HYD-EXCUS-SC-AP2-01-2024-25 dt.31.05.2024 passed
by Commissioner of Central Tax & Customs (Appeals-II), Hyderabad)
M/s Suryauday Spinning Mills Pvt Ltd
A1 Block-104, 2nd Floor, Surya Towers, ......Appellant
SP Road, Secunderabad, Hyderabad - 500 003
VERSUS
Commissioner of Central Tax
Secunderabad - GST
GST Bhavan, LB Stadium Road,
......Respondent
Basheerbagh, Hyderabad - 500 004 Appearance:-
Shri Ch. Sumanth & Ms. Anushka Rastogi, Advocates for the Appellant. Shri B. Subhas Chandra Bose, AR for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30141/2025 Date of Hearing: 24.02.2025 Date of Decision: 29.04.2025 M/s Suryauday Spinning Mills Pvt Ltd (hereinafter referred to as the Appellant) are in Appeal against the OIA dt.31.05.2024 passed by the Commissioner (Appeals), whereby the appeal filed by the appellant was rejected and the OIO dt.08.03.2024 was upheld.
2. The issue, in brief, is that as a consequence of order passed by the Tribunal, vide Final Order No. A/30310/2023 dt.06.10.2023, the appellant filed a refund claim of Rs.1,28,95,173/- along with interest with the jurisdictional Refund Sanctioning Authority (RSA). However, the total refund granted along with interest by the RSA was only Rs.1,34,10,704/-. While arriving at the said amount, the RSA has split the claim into two parts. A part of amount was treated as pre-deposit and therefore, entitled for refund (2) E/30367/2024 in accordance with provisions under section 35FF of the Central Excise Act, 1944 (hereinafter referred to as the Act), whereas, the remaining amount of the claim i.e., Rs.1,16,05,656/- was treated by him as being governed by section 11B of the Act and therefore, no interest was paid thereon as the refund has been made well within the time limit prescribed under the law. The Adjudicating Authority has mainly relied on the Circular No.984/08/2014-CX dt.16.09.2014 for deciding the claim of refund, the relevant para of which has been extracted in the impugned order at para 8. The appellants are in appeal against interest calculated by RSA in respect of deposit made by them in the course of enquiry, which became refundable to them in terms of the Order of the Tribunal.
3. Learned Advocate for the appellant is mainly contesting that the amount paid under protest is in the nature of revenue deposit and hence, it will not be covered by section 11B of the Act. They have placed reliance on the following judgments:-
a) Sunrise Immigration Consultants Pvt Ltd Vs CCE [2023 (4) TMI 504 - CESTAT Chandigarh]
b) Pr. Commr. CGST Vs Green Valliey Industries Pvt Ltd [2023 (7) TMI 1176 - Meghalaya HC]
c) Bagadiya Brothers Pvt Ltd Vs CC, Visakhapatnam [Final Order - A/30257-3025/2014]
d) Parle Agro Pvt Ltd Vs CCE [2018 (360) ELT 1005 (Tri-All)]
e) CCE Vs Pricol Ltd [2015 (320) ELT 703 (Mad)]
f) Jagdamba Ispat and Jagdamba TMT Mills Ltd Vs CCE, Jaipur [2022 (7) TMI 520 - CESTAT, New Delhi]
4. They have also contested that while the interest is payable on the entire amount @ 6%, in terms of various decisions, up to the date of sanction and even without prejudice to this, the amount of interest paid under section 35FF is also not correct. They have also submitted that reliance placed by the RSA on the circular is not a binding circular on quasi judicial authority, as held in following judgments:-
a) CCE, Bhopal Vs Minwool Rock Fibres Ltd [2012-TIOL-18-SC-CX]
b) CCE, Bombay Vs Kores India Ltd [2002-TIOL-414-SC-CX]
c) CC, Chennai Vs Avenue Impex [2014 (306) ELT 69 (Mad)] (3) E/30367/2024
d) CC & CE, Tirupati Vs Panyam Cements & Minerals Industries Ltd [2016 (331) ELT 206 (AP)]
e) Logic India Trading Co Vs CC, Cochin [2016 (337) ELT 65 (Tri-Bang) and affirmed by Apex Court reported in 2016 (342) ELT A34 (SC)]
5. Further, though they have claimed refund with interest @ 6%, they are also relying on various judgments of Hon'ble Supreme Court, High Courts and Tribunals including Sandvik Asia Ltd Vs CIT-I, Pune [2006 (196) ELT 257 (SC)], wherein, the interest has been granted @ 12%.
6. On the other hand, learned AR submits that the interest has been calculated correctly in accordance with the clarification issued vide Circular dt.16.09.2014 and statutory provisions and for the remaining amount, the refund has been granted but interest was not paid, which is also in accordance with the provisions under section 11B of the Act, as the refund was sanctioned within time. They have relied on various judgments as under:-
a) M/s Spicejet & Others Vs CCT, Hyderabad [Final Order - A/30015- 30024/2025 dt.20.01.2025 (Tri-Hyd)]
b) Union of India Vs Willowood Chemicals Pvt Ltd [2022 (60) GSTL 3 (SC)]
c) M/s SKJ Metals Company Vs CCE, Agra [2025 (2) TMI 4 - CESTAT Allahabad]
d) Nino Chaks (P) Ltd Vs CC [2020 (371) ELT 701 (Del)]
e) Hindustan Agro Insecticides Vs CCT, Guntur [2019 (367) ELT 669 (Tri- Hyd)]
f) India Cements Vs CCE, Medchal [Final Order - A/30081/2024 dt.23.02.2024 (Tri-Hyd)]
7. Heard both sides and perused the records.
8. From the perusal of the case records, I find that pursuant to the Final Order of the Tribunal dt.06.10.2023, the appellants filed refund application dt.12.12.2023, wherein, inter alia, they had shown the amount of Rs.1,28,95,173/-, being an amount deposited by them, on various dates and therefore, sought refund of the said amount along with applicable interest. Having regard to the circular dt.16.09.2014, the RSA has split the (4) E/30367/2024 refund amount into two categories. In terms of section 35F, it has been calculated that an amount of Rs.9,67,138/- was the amount of pre-deposit @ 7.5% (before Commissioner (Appeals)) and an amount of Rs.3,22,379/- was the amount of pre-deposit @ 2.5% (before Tribunal) and the applicable interest @ 6% on the said amounts of pre-deposit from the date of filing of respective appeals would be Rs.3,99,203/- and Rs.1,16,328/- respectively. The appellants are contesting that apart from the fact that they are entitled for refund on the entire amount from the date of deposit itself, without prejudice to the same, even the calculations under section 35F and section 35FF are not correct, in view of the fact that section 35F provides for pre- deposit of 7.5% or 10%, as the case may be, of the disputed duty, while, the RSA has taken the base as Rs.1,28,95,173/-, which is not the disputed duty and in fact, it is the amount paid under protest, whereas, the actual disputed duty is Rs.1,62,60,808/-. Therefore, for working out the total amount of duty and interest, the base has to be Rs.1,62,60,808/- and not Rs.1,28,95,173/-. According to their calculation, therefore, the pre-deposit applied out of total deposit before Commissioner (Appeals) would be Rs.12,19,561/- (7.5% of Rs.1,62,60,808/-) and interest on that amount would be Rs.5,03,395/- @6%. Similarly, the pre-deposit before Tribunal would be Rs.4,06,520/- (2.5% of Rs.1,62,60,808/-) and the interest on that amount would be Rs.1,46,681/- (@6%). Therefore, as per the clear reading of this provision, it is obvious that the calculation under section 35F and section 35FF is done wrong by the RSA. Further, I find that the provisions under section 35F and 35FF are statutory provisions and except for the fact that the amount has been wrongly calculated by basing the same on the amount deposited under protest rather than basing the same on the total disputed amount in the appeal, there is no infirmity in the Order of the RSA, as upheld by the Commissioner (Appeals) to the extent of granting refund and interest under section 35F. The amount of interest @6% from the date of filing of appeal under section 35FF would be Rs.6,50,076/-.
9. The second aspect is where refund has been granted on Rs.1,16,05,656/- without any interest, primarily, on the ground that this amount cannot be considered as pre-deposit and is covered by section 11B. Before I proceed further, in view of my findings in para 8 above, this remaining amount would be Rs.1,28,95,173/-. The issue is whether Rs.1,28,95,173/-, which has been refunded without any interest is correct or (5) E/30367/2024 otherwise. On going through the arguments, I find that section 11B of the Act regulates the grant of refund and section 11BB regulates the grant of interest. A plain reading of section 11B would indicate that it covers refund of any duty of excise and interest, if any, paid on such duty. It also provides for various conditions required for seeking refund and it also provides for limitation within which refund can be claimed under that section. It also provides that the refund, if found eligible, is to be credited to the fund except under certain circumstances as provided in proviso to section 11B(2). Further, it also, by virtue of explanation, provides that refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India.
10. Section 11BB provides for interest on delayed refund of duty amount under section 11B(2) in case the said refund is not made within three months from the date of receipt of application under sub-section (1) of that section. Therefore, first issue is whether the amount for which the refund has been claimed is in the nature of duty and therefore, governed by section 11B or otherwise. The terms duty of excise has been defined in the charging section of the Act i.e., section 3, wherein, it has been stipulated that it should be levied and collected in such manner as may be prescribed a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the Fourth Schedule. In the present appeal, the refund is arising on account of order of the Tribunal dt.06.10.2023. The issue before the Tribunal was whether the appellants have reversed the credit or paid an amount in accordance with provision of Rule 6 of Cenvat Credit Rules (CCR) or otherwise. The department had asked the appellant to reverse an amount of Rs.1,62,60,808/-, being credit availed in respect of inputs used in manufacture of exempted goods, as against that, the appellant made a total payment of Rs.1,28,95,173/- under protest, contesting that the appellant is not required to reverse the credit on exempted goods.
11. The Tribunal in view of the statutory provisions felt that total reversal of credit was not warranted and held that in view of the provisions under Rule 6(3) of Cenvat Credit Rules, 2004, the appellants were free to choose (6) E/30367/2024 any of the options under Rule 6(3). Therefore, essentially, the Tribunal did not agree with the demand for reversal as proposed by the department and instead allowed them that they could opt for payment of an amount equivalent to 5% or 6% of the value of exempted goods, setting aside the impugned order.
12. I observe that the Adjudicating Authority had held that credit for input used in manufacture of exempted goods was ineligible and demanded an amount equal to Rs.1,62,60,808/- being the irregular Cenvat credit availed on inputs. What essentially transpires from this background is that the issue covered in the appeal was not relating to duty of excise but it was relating to reversal of amount of credit or payment of an amount equivalent to the credit in a situation where common credit has been taken in relation to both exempted goods and dutiable goods and therefore, the nature of reversal or payment of an amount equivalent in terms of Rule 6 under any of its sub- clauses cannot be equated, at par, with 'duty' of excise, as relevant to in section 11B, so as to bring it within the purview of section 11B of the Act. It is also an admitted fact that the said amount was paid by the appellants 'under protest' in the course of enquiry. I also find that admittedly, the doctrine of unjust enrichment, as required under section 11B has not been applied in the case of present refund, which should have been applied had it been treated as a case of refund of duty of excise governed by section 11B of the Act.
13.1. I have also perused the circular, which has been relied upon by the RSA. It is obvious that for the purpose of section 35F, at para 3, the payments made during the course of investigation or audit, prior to the date on which appeal is filed, to the extent of 7.5% or 10%, subject to the limit of Rs.10 crores, can be considered to be deposit made towards fulfillment of stipulation under section 35F. It further provides that the said amount paid during the investigation or audit, takes the color of deposit under section 35F only when the appeal is filed. Further, at para 5.2, it also clarifies that pre-deposit for filing the appeal is not payment of duty. Hence, refund of pre-deposit need not be subjected to process of refund of duty under section 11B of the Act.
(7)E/30367/2024 13.2. In this case, it is also on record that the amount paid in the course of enquiry/audit was appropriated by the Adjudicating Authority. Therefore, if a part of this is being again apportioned or applied towards pre-deposit under section 35F and that part is not being treated as duty, it would amount to re-appropriation of duty towards payment of pre-deposit. If the entire scheme of the Act and its relevant provisions are seen holistically, it would indicate that certain amounts paid on ad hoc basis or under protest in the course of enquiry or investigation or audit, they do not take the color of duty, suo moto, unless such payment has been made in terms of section 11A(1)(b) of the Act, which is admittedly not the case in the present appeal. Further, even section 11B clearly debars from the operation of unjust enrichment in respect of certain categories including refund of credit of duty paid on excisable goods used as inputs in accordance with rules made or any notification issued under this Act. This again is not applicable in the factual matrix of the present appeal. It is also important to note that departmental officers are having statutory power under section 11 to recover any sum due to the Government in accordance with the procedure, which, inter alia, also provides recovery of any amount in the control with the department. In this case, the amount paid under protest in the course of inquiry was appropriated towards recovery of total duty liability finally confirmed by Adjudicating Authority. This aspect also further gives credence to the submission that till the time it was appropriated, it was not in the nature of duty and the appropriation is only a means to recover the dues to the Government, whereby, the said amount was appropriated towards duty. Therefore, at best, on the date on which the appropriation of said amount has taken place, the said amount takes the color of duty. However, in view of circular dt.16.09.2014, which permits for allocating part of such payment towards pre-deposit, it would be difficult to accept the submission of Department that the payment made by the appellant would be in the nature of duty, as it would more be in the nature of ad hoc payment or revenue payment or an on account payment with the Government. Essentially, it was an ad hoc payment, which was to be adjusted on final confirmation of demand against the appellant. However, when the Tribunal has set aside the confirmation of said demand itself, even the appropriation of the said amount has failed. Therefore, right since it is deposited till the time refund (8) E/30367/2024 application has been filed, it has remained in the status of an amount, which was not in the nature of duty.
14. Coming to the various judgments cited by the appellant, I find that in Parle Agro Pvt Ltd Vs CCE (supra), at para 30, the Tribunal held that the provisions of section 11B of the Act would not be applicable as the appellant was not claiming refund of duty and has, in fact, claimed refund of revenue deposit. The facts of the case were that during the pendency of the investigation, the appellant had made certain payments by way of debit in PLA with endorsements that the amount was being paid under protest. It was also observed by the Tribunal that there is neither a provision in the Excise Act, which deals with the refund of revenue deposit nor rate of interest has been prescribed when revenue deposit is required to be refunded. Similarly, in the case of Bagadiya Brothers Pvt Ltd & Others Vs CC (supra), where certain amount was voluntarily paid by the assessee under protest, it was held, inter alia, that the said payment, which was made under protest during the investigation takes the character of revenue deposit. It also took into account the judgment of Hon'ble Delhi High Court in the case of Team HR Services Pvt Ltd Vs UOI & Anr [2020 (6) TMI 342 - HC Del]. In the case of Parle Agro Pvt Ltd Vs CCGST, Noida [2022 (380 ELT 219 (Tri-All)], the Tribunal, relying on the judgment of Hon'ble Punjab & Haryana High Court in the case of CCE, Gurgaon Vs Alcatel Modi Network System Ltd [2008 (221) ELT 358 (P & H)], held that any amount deposited during the pendency of investigation and proceedings, if the same are not adjudged as duty, fine or penalty then the amount that is not adjudged as duty, fine or penalty is to be treated as revenue deposit and the provisions of refund of duty shall not be applicable to the same. For the reasons discussed in the foregoing paras, the amount paid has not been treated as duty and it was only later on appropriated towards the payment, which was in relation to reversal of credit. Moreover, the said appropriation itself was set aside by the Tribunal when the entire order was set aside.
15. In the case of Principal Commissioner of CGST Vs Green Valliey Industries Pvt Ltd (supra), wherein, the facts were that the assessee had paid certain amount under protest even before the issue of SCN, the Hon'ble High Court, inter alia, endorsed the view of the Tribunal that the deposit was made at a time when no quantified claim had been made on the assessee (9) E/30367/2024 and on the basis of the same, the Tribunal has found that deposit has not been made on account of duty or interest which could attract the implied bar under section 11B of the Act.
16. In the case of M/s Kukreti Steels Ltd Vs CCGST, Dehradun [2021 (8) TMI 751 - CESTAT New Delhi], the Single Member Bench of the Tribunal even went to the extent of holding that the entire amount of pre-deposit, even if it is more than the prescribed limit, has to be refunded by the department along with interest @ 12% per annum. However, I respectfully differ with this judgment on the ground that when there is a statutory provision to regulate pre-deposit under section 35F and 35FF, which leaves no ambiguity, the entire amount of deposit cannot be treated as pre-deposit for the purpose of refund under section 35F or section 35FF of the Act.
17. Therefore, I find that in the given factual matrix, the amount of deposit made under protest, except to the extent of amount which has been appropriated towards requirement of making pre-deposit under section 35F, would be in the nature of revenue deposit and therefore, it will not be covered by the provisions of section 11B of the Act, as held by Commissioner (Appeals) in his impugned order while upholding the order of the RSA. The reliance placed by the Revenue on the judgment of Hon'ble Supreme Court in the case of Union of India Vs Willowood Chemicals Pvt Ltd (supra) is also misplaced inasmuch as this judgment is in respect of interest on delayed refund under IGST Act, whereas, in the present case, the issue is under section 11B of Central Excise Act. Therefore, the facts are distinguished. The reliance placed by Revenue on Single Member Bench decision in the case of M/s Spicejet & Others Vs CCT, Hyderabad (supra) is also not correct as the issue before the Bench was the condonation of delay, whereas, in this case, it is grant of refund of revenue deposit. Further, though the Tribunal is a creature of statute, when there is no provision within the statute, the reliance can be placed on the decisions of higher judicial forums to decide the case. Therefore, the issue in the present appeal is not regarding going beyond the statutory provisions. The reliance placed by the Revenue on the Single Member decision in the case of M/s SKJ Metals Company Vs CCE, Agra (supra), where a very detailed order has been passed, holding, inter alia, that even if the amount is considered to be refund of revenue deposit, the same has to be refunded under section 11B, I (10) E/30367/2024 find that the learned Member has heavily relied on the judgment of Hon'ble Supreme Court in the case of Mafatlal Industries [1997 (89) ELT 247 (SC)], however, it is to be noted that in the case of Mafatlal Industries, the Hon'ble Supreme Court was primarily considering the scope, ambit and extent to which doctrine of unjust enrichment under section 11B would apply and therefore, the Court laid down various propositions of law. Therefore, as discussed supra, the issue of unjust enrichment is not relevant in the factual matrix of the present case, as the same has not been even invoked by the RSA. In view of various other judgments cited by the learned Advocate, I am not inclined to rely on this judgment of Single Member to arrive at the same conclusion as the learned Single Member has arrived at in the given factual matrix, as facts are clearly distinguished.
18. Coming to the issue of payment of interest, I find that there is no specific provision for grant of refund of revenue deposit under the statute, however, following various judicial pronouncements, different forums including Tribunals have been awarding interest @ 6%, as well as in some cases @ 12%, following the judgment of Hon'ble Supreme Court in the case of Sandvik Asia Ltd Vs CIT-I, Pune (supra). I also find that the Hon'ble Supreme Court in the case of Poornima Advani & Ors Vs Govt. of NCT & Ors [MANU/SC/0265/2025], inter alia, held that interest was payable in relation to refund of certain amount which was retained by the Government. Some of the relevant paras of the Order are extracted below:-
"16. The concept of awarding interest on delayed payment has been explained by this Court in the case of Authorised Officer Karnataka Bank v. M/s R.M.S. Granites Pvt. Ltd. & Ors. in Civil Appeal No. 12294 of 2024, we quote the following observations:-
"It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say ten years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B ten years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B. [See: Alok Shanker Pandey v. Union of India : AIR 2007 SC 1198.]"
19. As per Stroud's Judicial Dictionary of Words and Phrases (5th edn.):
interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money.(11)
E/30367/2024
20. In the case of Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, (1992) 1 SCC 508, a Constitution Bench of this Court opined that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is also the principle of Section 34 of the Civil Procedure Code.
22. In the case of Commissioner of Income Tax v. Dr. Sham Lal Narula, AIR 1963 Punjab 411, a Division Bench of the High Court of Punjab articulated the concept of interest as under:-
"The words 'interest' and 'compensation' are sometimes used interchangeably and on other occasions they have distinct connotation. "Interest" in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. In its narrow sense, 'interest' is understood to mean the amount which one has contracted to pay for use of borrowed money. ......... In whatever category "interest" in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by custom or usage, for use of money belonging to another, or for the delay in paying money after it has become payable." (Emphasis supplied)
24. In the case of Hello Minerals Water (P) Ltd. v. Union of India, (2004) 174 ELT 422, (paras 15 and 16), a Division Bench of the Allahabad High Court explained the concept of interest as under:-
"15. We may mention that we are passing the direction for interest since interest is the normal accretion on capital. Often there is misconception about interest. Interest is not a penalty or punishment at all.
..............."
26. In Hari Chand v. State of U.P., 2012 (1) AWC 316, the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. The High Court directed the State to pay interest @ 8% for the period, the money was so retained i.e. from the date of deposit till the date of actual repayment/refund.
27. In the case of O.N.G.C. Ltd. v. Commissioner of Customs Mumbai, JT 2007 (10) SC 76, (para 6), the facts were that the assessment orders passed in the Customs Act creating huge demands were ultimately set aside by this Court. However, during pendency of appeals, a sum of Rs. 54,72,87,536/- was realized by way of custom duties and interest thereon. In such circumstances, an application was filed before this Court to direct the respondent to pay interest on the aforesaid amount w.e.f. the date of recovery till the date of payment. The appellants relied upon the judgment in the case of South Eastern Coal Field Ltd. v. State of M.P., (2003) 8 SCC 648.
This Court explained the principles of restitution in the case of O.N.G.C. Ltd. (supra) as under:-
(12)E/30367/2024 "Appellant is a public sector undertaking. Respondent is the Central Government. We agree that in principle as also in equity the appellant is entitled to interest on the amount deposited on application of principle of restitution. In the facts and circumstances of this case and particularly having regard to the fact that the amount paid by the appellant has already been refunded, we direct that the amount deposited by the appellant shall carry interest at the rate of 6% per annum. Reference in this connection may be made to Pure Helium Indian (P) Ltd. v. Oil & Natural Gas Commission, JT 2003 (Suppl. 2) SC 596 and Mcdermott International Inc. v. Burn Standard Co. Ltd. JT 2006 (11) SC 376." (Emphasis supplied)
29. In the case of Union of India through Director of Income Tax v. Tata Chemicals Ltd., (2014) 6 SCC 335, this Court held that when the collection is illegal, the Revenue is obliged to refund such amount with interest as money so deposited was retained and enjoyed by it. No discrimination can be shown between the assessee and Revenue in paying interest on the refund of tax. Money received and retained without right, carries with it the right to interest. There being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, the Government cannot shrug off its apparent obligation to reimburse the deductors lawful monies with accrued interest for the period of undue retention of such monies.
Obligation to refund money received and retained without right implies and carries with in the right to interest. The relevant observations are as under:-
"Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course." (Emphasis supplied)""
19. I also find that in the case of Modi Industries Ltd Vs CIT & Anr [1995 (6) SCC 396], Hon'ble Supreme Court has clarified that wherever statute specifies or regulates the interest, the interest will be payable in terms of provisions of the statute and wherever the statute is otherwise silent about the rate of interest and there is no express bar for payment of interest, any (13) E/30367/2024 delay in payment of compensation or amount due, would attract amount of interest at a reasonable rate on equitable grounds.
20. Therefore, in the facts of the case, the interest is payable on the amount of Rs.1,28,95,173/-, w.e.f. from the dates of deposit made by the appellant. As far as the rate of interest is concerned, since there is no specific rate prescribed, I am inclined to allow the interest @ 6%, in view of the fact that similar rate of interest is also admissible for pre-deposit under section 35FF of the Act and the fact that the amount of pre-deposit has been appropriated from the same amount. Therefore, in the facts of the case, the rate of interest would be @ 6%. Moreover, it is seen that in the prayer itself, the total relief sought by the appellant is only Rs.59,98,517/- for refund under section 35FF, as redetermined, the differential amount will be payable. Therefore, the appellants will be entitled for refund, as discussed supra, subject to the cap of Rs.59,98,517/-.
21. Accordingly, the appeal is allowed with consequential relief.
(Pronounced in the Open Court on 29.04.2025) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda