Litigation Loving Revenue to pay interest on interest payable - Revenue High-handedness condemned by High Court
IT is easier for a camel to pass through the eye of a needle than an assessee to get refund from the Indirect Taxes Department. It is easier for two camels to pass through the eye of that needle than for an assessee to get interest on that refund.
But here is an assessee who got not only the refund and interest, but interest on interest - due to the perseverance of the department, yes the department. Their love for litigation finally landed them in this comically sad situation. Of course it took 17 long years.
It is a long story, which I had briefly narrated in DDT 2561.
An importer realised that he paid the Customs duty, even though he was eligible for an exemption. He promptly filed a refund claim of Rs.1,06,74,049/- on 24.12.1998 and it was promptly rejected.
The Commissioner (Appeals) allowed the appeal but ordered crediting the refund amount to the Consumer Welfare Fund on the ground of unjust enrichment.
Appeal against the said order was allowed by the Tribunal vide order dated 27.07.2005 in favour of the appellant by holding that the refund claim is not hit by the principles of unjust enrichment.
The Revenue appeal against the Tribunal order was dismissed by the High Court on 01.04.2010. Revenue took the matter to the Supreme Court, where also it lost the case on 21.02.2011.
The importer approached the Customs for refund with interest - twelve years after filing the first refund claim.
The Department was kind enough to grant refund but not interest.
The Commissioner (Appeals) upheld the rejection of interest on the ground that the refund amount has been sanctioned within three months from the date of judgment of Hon'ble Supreme Court in dismissing the Special Leave Petition (SLP) filed by the department; and that for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department.
The importer approached the Tribunal again. The Tribunal allowed the appeal with consequential benefits observing that the object behind insertion of interest provisions in Section 27A of the Act is that interest is compensatory in character. ().
The never say die, Revenue is in appeal before the High Court again.
The High Court in a very refrained order condemned the Revenue to a further interest at 9%.
Some observations of the High Court.
Even when on 27.07.2005, the Tribunal allowed the appeal of the respondent-company with consequential benefits, yet the amount was not refunded and therefore, the matter was taken up by the Revenue before the High Court and further also before the Supreme Court, where the appellant-Revenue had been unsuccessful. It was then, after more than 12 years of filing of the application for refund, on 13.04.2011 an order was passed by the Assistant Commissioner for refunding the amount, but without interest.
Here, we may mention that initially itself it took nearly three years for the Department to process the application of the respondent for refund of customs duty and pass an order on the same, which, in our opinion, does not appear to be justified, but we however refrain from passing any further comments on this issue.
Even after the amount was found to be payable to the respondent-company, the appellant-Revenue did not pay the interest on the amount to be refunded. Admittedly, the respondent was deprived of the amount of over Rs.1 Crore which had been deposited by it, and was found refundable to the respondent-company. Earlier also, the appellant dragged on the matter up to the Supreme Court, and paid the amount only after more than 12 years when the matter was finalized by the Supreme Court.
The appellant (Revenue) has been misinterpreting the law, and thereby depriving the respondent from its rightful claim of interest, even after the order for refund of the amount had been made upto the Supreme Court. Not only that, the interest has been denied to the respondent even though the order directing payment of interest was made by the Tribunal on 21.05.2014, which was based on a decision of the Supreme Court. Merely because of the pendency of this appeal, though there was no stay order granted, the appellant has thus, without any valid reason, further delayed the payment of interest for a period of over 15 months from the date of the order of the Tribunal dated 21.05.2014.
At least now, will they pay the interest or take the matter to the Supreme Court?
We bring you this exemplary order today, which should be an example for all those pseudo revenue lovers, who pretend to protect the interest of revenue by unimaginable demands, illegal rejection of refunds etc. The department should realize that such officers are actually an impediment in Revenue realization.