Punjab-Haryana High Court
Commissioner, Central Goods And ... vs Riba Textile Ltd on 14 March, 2022
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CEA No.8 of 2022 (O&M)
Date of Decision : March 14, 2022
Commissioner of Central Excise, Panchkula
.....Appellant
vs.
M/s Riba Textiles Limited
.....Respondent
CORAM : HON'BLE MR. JUSTICE AJAY TEWARI
HON'BLE MR. JUSTICE PANKAJ JAIN
Present : Mr. Sourah Goel, Senior Standing Counsel assisted by
Mr. Tej Bahadur, Advocate
for the appellant.
PANKAJ JAIN, J.
This appeal has been filed against the order passed by Customs,
Excise & Services Tax Appellate Tribunal, Chandigarh whereby the
respondent has been held to be entitled for interest of refund from the date
of deposit and the order whereby the application for rectification of mistake
filed by the appellant has been dismissed.
2. The respondent/Assessee having its registered office at Sonepat
had applied for central excise duty along with interest before the Deputy
Commissioner, Central Excise, Division Panipat. The Deputy
Commissioner, Central Excise, Division Panipat vide order dated 21st June,
2017 allowed and sanctioned refund of Rs.54.00 lacs to the Assessee
however claim w.r.t. interest was rejected.
3. The respondent/Assessee challenged the said order qua
rejection of interest in appeal before the Commissioner of Central Excise
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(Appeals), Panchkula which was also dismissed vide order dated 18th
January, 2018. The Assessee took the matter in appeal before CESTAT,
Chandigarh. CESTAT vide order dated 7th January, 2020 held the Assessee
entitled for interest on delayed refund from the date of deposit till its
realization thereof. The Assessee approached the authorities of Panipat
Division for refund on 24th February, 2020. While the application of the
Assessee was pending before the Authorities at Panipat Division, the
Commissioner of CGST and Central Excise, Panchkula filed rectification of
mistakes application before the CESTAT. The said application has also
now been dismissed by the CESTAT vide order dated 30th December, 2021.
Consequently, the Revenue has come in appeal against the aforesaid orders
passed by the Tribunal.
5. Mr. Sourabh Goel, Senior Standing Counsel appearing for the
Revenue has primarily raised question w.r.t. the change in jurisdiction of the
Authorities after the coming of new CGST regime. He claims that w.e.f. 1st
July, 2017 the Central Goods and Services Tax Act, 2017 (for short, 'the
Act') has come into force. Keeping in view that the new tax regime has
come into force, the erstwhile Central Excise and Customs
Commissionerates were re-organised into Central Goods and Services Tax
(Central Tax) Commissionerates w.e.f. 22nd June, 2017. The territorial
jurisdiction of such Central Tax Commissionerates notified by the
Government vide Notification No. 2/2017-Central Tax dated 19th June, 2017
and brought into force w.e.f. 22nd June, 2017. The erstwhile Central Excise
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Commissionerates of Gurgaon-I, Gurgaon-II, Rohtak, Sonipat (Delhi-III),
Panchkula, Faridabad-I and Faridabad-II, which earlier were under Delhi
Central Excise Zone, were now brought under a newly created Chief
Commissioner of CGST and Central Excise Zone, Panchkula and re-
organised into Gurugram, Rohtak, Panchkula and Faridabad Central Tax
Commissionerates. The Central Excise Commissionerate of Sonepat
(Delhi-III) was dissolved and the districts of Panipat and Sonepat in the
State of Haryana that comprised it were merged with Panchkula and Rohtak
Commissionerate respectively. At the same time, to discharge the functions
under the Central Excise Act, 1944 and the legacy matters under the Finance
Act, 1994, Central Excise Officers were appointed vide Notification No.
12/2017-Central Excise (NT) dated 9th June, 2017, and their territorial
jurisdiction was notified under the Notification No.13/2017 dated 9th June,
2017. These two notifications were also brought into force w.e.f. 22nd June,
2017. For the administrative convenience, the territorial jurisdiction of the
Central Tax and the Central Excise Officers has been kept identical. Thus,
w.e.f. 22nd June, 2017, the Central Excise Division Panipat, which was
earlier under the now dissolved Sonepat (Delhi III) Commissionerate, came
under Panchkula Central Excise Commissionerate. Division Sonepat was
brought within the jurisdiction of Rohtak Commissionerate. Thus, he claims
that the respondent/Assessee impleaded wrong authorities for claim of
refund and interest .
6. Secondly, the Counsel has argued that the Tribunal erred in
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granting interest as per the amended provisions of Section 35FF of the
Central Excise Act, 1944.
7. Having heard Counsel for the appellant we find that both the
arguments raised by him need to be rejected. Claim for refund in the
present case was filed on 6th January, 2016 which was returned and again
filed on 19th April, 2017. Section 142 of the Act deals with miscellaneous
transitional provisions including the claim for refund filed by any person
before, on or after the appointed day for refund of any amount of CENVAT
credit, duty, tax, interest or any other amount paid under the existing law.
8. Section 142 of the Act when read with Section 2(48) of the Act
is a complete answer to the plea raised by the appellant qua the issue of
jurisdiction. The provision explicitely provides that every claim of refund
shall be dealt under the existing law i.e. Central Excise Act, 1944 and not by
the provisions of the Act. Thus the plea of transfer of jurisdition due to GST
regime is not available to the appellant.
9. While deciding the issue of interest, Ld. Tribunal has relied
upon the law laid down by the Apex Court in Sandvik Asia Ltd vs. CIT,
Pune - 2007 (8) STR 193 (SC) wherein it was held that :-
"45. 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
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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 adversely 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 1978-79, 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.
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COMPENSATION:
46. 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 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."
47. 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.
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48. This is the fit and proper case in which action should
be initiated against all the officers concerned who were all in
charge of this case at the appropriate and relevant point of
time and because of whose inaction the appellant was made to
suffer both financially and mentally, even though the amount
was liable to be refunded in the year 1986 and even prior to.
A copy of this judgment will be forwarded to the Hon'ble
Minister for Finance for his perusal and further appropriate
action against the erring officials on whose lethargic and
adamant attitude the Department has to suffer financially.
49. By allowing this appeal, the Income-tax Department
would have to pay a huge sum of money by way of
compensation at the rate specified in the Act, varying from
12% to 15% which would be on the high side. Though, we
hold that the Department is solely responsible for the delayed
payment, we feel that the interest of justice would be amply
met if we order payment of simple interest @ 9% p.a. from the
date it became payable till the date it is actually paid. Even
though the appellant is entitled to interest prior to 31.03.1986,
learned counsel for the appellant fairly restricted his claim
towards interest from 31.03.1986 to 27.03.1998 on which date
a sum of Rs.40,84,906/- was refunded.
50. The assessment years in question in the four appeals
are the assessment years 1977-78, 1978-79, 1981-82 and
1982-83. Already the matter was pending for more than two
decades. We, therefore, direct the respondents herein to pay
the interest on Rs.40,84,906 (rounded of to Rs.40,84,900)
simple interest @ 9% p.a. from 31.03.1986 to 27.03.1998
within one month from today failing which the Department
shall pay the penal interest @ 15% p.a. for the above said
period."
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9. It is not disputed that the provisions of Income Tax Act, 1961
and Central Excise Act, 1944 are pari materia and, therefore, law laid down
by the Supreme Court in the case of Sandvik Asia Ltd. (supra) shall be
applicable to the present case.
10. Ld. Counsel for the appellant is not in a position to deny the
proposition of law laid down in the case of Sandvik Asia Ltd. (supra) and
the applicability thereof to the facts of the present case.
11. Consequently, finding no merit in the present case, the instant
appeal is hereby dismissed.
(AJAY TEWARI) (PANKAJ JAIN)
JUDGE JUDGE
March 14, 2022
Dpr
Whether speaking/reasoned : Yes
Whether reportable : Yes
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