Assessee undertakes not to claim interest on refund - No estoppel!
QUITE often the Revenue officers sit on refund claims hoping that some miracle will happen and they will be spared from the ignominy of actually giving a cash refund to an unscrupulous assessee who has the audacity to claim refund. And some uninitiated assessees have the temerity to claim interest if the refund claims are delayed by a couple of decades for genuine and understandable reasons and for no fault of the dedicated officers of the tax department.
If refund is taboo, interest on delayed refund is sacrilege and no revenue officer would ever dare to grant refund with interest, especially in indirect taxes. They go all out - to any means - mostly foul, to avoid payment of interest. One modus operandi of these clever officers is to blackmail the assessees into giving an undertaking that they voluntarily forego interest and they would be more than happy if the refund is granted to them without interest.
How far is this legal?
In a recent case before the Tribunal, an assessee filed refund claims in 2005 and due to reasons known only to the Department, the refund claims were not finalized in time and were kept pending. Sometime in the year 2008 the Jurisdictional Central Excise Authority woke up to the pendency of these refund claims and also to the possibility having to pay interest for the period of delay beyond the period of three months from the date by filing of refund claim.
In 2008, the assessee wrote to the Assistant Commissioner that since they are interested in getting the amount involved in the refund claim urgently, they will not claim interest which may be due to them on account of delay in sanction of the claims.
And the Assistant Commissioner sanctioned the refund without interest!.
Later the assessee filed appeals before the Commissioner (Appeals)to claim to interest under Section 11BB, for the period of delay beyond the period of 3 months from the date of filing of the claims.
The Commissioner (Appeals)dismissed the appeals on the ground that when the Appellant themselves have given up their claim on interest for the period of delay, they cannot raise this issue at the appellate stage.
And the assessee approached the Tribunal.
The Tribunal found the decision of the Commissioner (Appeals) to be absolutely incorrect and contrary to the Law. Right conferred under the statute cannot be given up on the basis of concession made by any party to the lis. Just because the appellant by the letters addressed to the Jurisdictional Assistant Commissioner had given up their claim for interest on the amount of refund for the period of delay in sanction of the refund claims, they would not be estopped from challenging the denial of interest and claiming the same when they are entitled for the same under the statutory provisions of Section 11BB. The impugned order is set aside and the Department is directed to pay the interest in terms of the provisions of Section 11BB.
Next time your Assistant Commissioner asks for that letter renouncing the claim for interest, happily give it to him, take your refund and go in appeal.
In this case, now, perhaps the assessee can demand interest on the illegally held up interest from 2008 to 2014. That will be another case.
We will bring you this interesting case tomorrow.