ORDER
SHEET IN THE HIGH COURT AT CALCUTTA An appeal from its Constitutional Writ Jurisdiction ORIGINAL SIDE GA No.1080 of 2013 APOT No.174 of 2013 WP No.883 of 2012 UNION OF INDIA & ORS.Versus PANSARI VEGETABLE & OILS PVT.LTD.BEFORE: The Hon'ble JUSTICE GIRISH CHANDRA GUPTA The Hon'ble JUSTICE TARUN KUMAR DAS Date :
6. h May, 2013.
For Appellant : Mr.R.Bharadwaj with Md.Talay Masood Siddiqui, Advocates For Respondent : Mr.R.K.
Chowdhury, Advocate The Court: This appeal is directed against a judgment and order dated 26th November, 2012 passed by sister Indira Banerjee, J.
The operative portion of the judgment is as follows: “The writ application is disposed of by directing the respondent authorities to refund penalty and fine refundable to the petitioner forthwith and in any case within thirty days from the date of communication of the order.
The value of the oil shall be assessed at the earliest and in any case within sixty days from the date of communication of this order after giving the petitioner an opportunity of hearing.
The petitioner shall be entitled to interest on delayed refund at the rate of 9% per annum from the date of the Appellate Order.”
Aggrieved by the judgment and order, the Revenue has come up in appeal.
Mr.Bharadwaj, learned Advocate appearing in support of the appeal, advanced the following submissions: (a) There is no question of payment of any interest in case of refund of fine or penalty because the same is not provided for in the statute.
(b) The Customs Act being a special Act and being a complete Code and not contemplating payment of interest there is no question in such a case of any interest being allowed.
(c) The Customs Act being a fiscal statute, equity has no manner of application.
(d) Alternatively or in any event under Section 27A of the Customs Act, 1962, interest could be paid or could be directed to be paid only at the rate fixed by the Central Government by its notification in the official gazette.
Section 27A provides as follows: “ Section [27A.
Interest on delayed refunds.
– if any duty ordered to be refunded under sub-section (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, [not below five percent].and not exceeding thirty percent per annum as is for the time being fixed [by the Central Government by Notification in the Official Gazette]., on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty : Provided that where any duty ordered to be refunded under subsection (2) of section 27 in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty.
Explanation.
– where any order of refund is made by the Commissioner (Appeals).Appellate Tribunal [ National Tax Tribunal ].or any court against an order of the [ Assistant Commissioner of Customs or Deputy Commissioner of Customs under sub-section (2) of section 27, the order passed by the Commissioner (Appeals).Appellate Tribunal [ National Tax Tribunal ].or as the case may be, by the court deemed to be an order passed under that sub-section for the purposes of this section.].”.
The notification dated 12th September, 2003 provides for payment of interest at the rate of 6%.
Therefore, the learned Trial Court erred in directing payment of interest at the rate of 9% per annum.
In support of his submission he relied upon a judgment in the case of Union of India & ORS.versus Orient Enterprises & Anr., reported in (1998) 3 SCC 501.
He drew our attention to paragraph 8 of the said judgment wherein the following views were expressed : “In the present case also till the insertion of Section 27-A in the Act by Act 22 of 1995 there was no right entitling payment of interest on delayed refund under the Act.
Such a right was conferred for the fiRs.time by the said provision.
Act 22 of 1995 also inserted Section 28-AA which provides for payment of interest on delayed payment of duty by a person who is liable to pay the duty.
Thus at the relevant time there was no statutory right entitling the respondents to payment of interest on delayed refund and the writ petition filed by them was not for the enforcement of a legal right available to them under any statute.
The claim for interest was in the nature of compensation for wrongful retention by the appellants of money that was collected from the respondents by way of customs duty, redemption fine and penalty.
In view of the law laid down by this Court in Suganmal a writ petition seeking the relief of payment of interest on delayed refund of the amount so collected could not, in our opinion, be maintained.
The decisions on which reliance has been placed by Shri Rawal were cases where the legality of the orders requiring payment of tax or duty were challenged and the High Court in exercise of its jurisdiction under Article 226 of the Constitution, while setting aside the said ordeRs.has directed the refund of the amount so collected with interest.
The direction for payment of interest in these cases was by way of consequential relief along with the main relief of setting aside the order imposing the tax or duty.
Those cases stand on a different footing and have no application to the present case.
The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the writ petition filed by the respondents before the High Court is dismissed.
No order as to costs.”
Mr.Bharadwaj also relied on a judgment in the case of C.I.T., Bombay versus M/S.Gwalior Rayon Silk Manufacturing Co.Ltd., reported in (1992) 3 SCC 32.for the following proposition: “It is settled law that the expressions used in a taxing statute would ordinarily be understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative animation In Raja Jagdambika Pratap Narain Singh v.
Central Board of Direct Taxes this Court held that equity and income tax have been described as strangeRs.The Act from the very nature of things cannot be absolutely cast upon logic.
It is to be read and understood according to its language.
If the plain reading of the language compels the court to adopt an approach different from that dictated by any rule of logic the court may have to adopt it, vide Azam Jha Bahadur (H.H.Prince) v.
E.T.O.Logic alone will not be determinative of a controveRs.arising from a taxing statute.
Equally, common sense is stranger and incompatible partner to the Income Tax Act.
It is not concerned itself (sic) with the principles of morality or ethics.
It is concerned with the very limited question as to whether the amount brought to tax constitutes the income of the assessee.
It is equally settled law that if the language is plain and unambiguous one can only look fairly at the language used and interpret it to give effect to the legislative animation.
Nevertheless, tax laws have to be interpreted reasonably and in consonance with justice adopting a purposive approach.
The contextual meaning has to be ascertained and given effect to.
A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee.
The object being that in computation of the net income, the statute provides deductions, exemptions or depreciation of the value of the capital assets from taxable income.
Therefore, buildings which have not been specifically defined to include road in the Act must be taken in the legal sense.”
Mr.Chowdhury, learned Advocate appearing for the writ petitioner/respondent, disputed the submissions advanced by Mr.Bharadwaj.
He contended that Section 27A has no manner of application because Section 27A applies to the cases of refund of duty.
In the case before us, the refund is on account of penalty and fine wrongfully realised from his client.
Therefore, Section 27A or the rates provided under the notification dated 12th September, 2003 shall have no manner of application.
The learned Trial Court, after considering the matter, allowed interest at the rate of 9% per annum and this Court should not interfere with the judgment under challenge.
We have considered the rival submissions advanced by the parties.
Briefly stated undisputed facts of the case are as follows: The writ petitioner/respondent purchased a ship known by the name of “M.V.Cathy Spirit”.
on high sea sale basis pursuant to an agreement dated 4th May, 2009.
On 29th May, 2009 the writ petitioner filed the bill of entry for assessment and clearance of the ship for the purpose of breaking and scraping.
The Additional Commissioner of Customs by his adjudication order dated 7th September, 2009 held that some of the fittings of the ship in question were imported without valid Special Import Licence and on that basis confiscated those goods and imposed redemption fine of Rs.9 lakhs and Rs.5 lakhs under Section 112 of the Customs Act.
For yet another type of goods for the same reason, identical confiscatory orders were passed and redemption fine was assessed at Rs.50,000/and Rs.25,000/-.
The writ petitioner without prejudice to his rights and contention that the adjudicatory order was bad, paid the aforesaid sum and preferred an appeal.
The appellate authority by its judgment and order dated 2nd December, 2009 allowed the appeal and directed refund of the monies paid by the writ petitioner on account of fine and penalty.
Since the Revenue did not carry out the appellate order, the writ petition was filed which was disposed of by the learned Trial Court by the impugned order.
The fiRs.and the second submissions of Mr.Bharadwaj, indicated above, were sought to be backed by the judgment in the case of Union of India & ORS.versus Orient Enterprises & Anr.
[supra].It can be pointed out that in the aforesaid judgment their Lordships did not hold that interest was not payable.
Their Lordships held that the writ petition was not filed for enforcing any legal right and therefore, the same was not maintainable.
Their Lordships approved the judgments passed by the High Court directing refund together with interest where legality of the orders requiring payment of tax or duty were challenged.
In the present case also what was under challenge was the legality of the confiscatory orders and consequent realization of fine and penalty which the appellate authority found illegal.
Therefore, the judgement in the case of Union of India & ORS.versus Orient Enterprises & Anr.
[supra]., far from supporting, militates against the submission of Mr.Bharadwaj.
The submission is also contrary to the views expressed by a Division Bench of this Court in the case of Madura Coats PVT.LTD.versus Commissioner of C.
Ex., Kolkata-IV, reported in 2012 (285) ELT 18.(Cal) wherein the following views were expressed: “The issue before the Supreme Court was whether the pre-deposit made as a pre-condition for the hearing of appeal under the Central Excise Act, 1944 was, on the assessee being ultimately successful, refundable to the assessee with interest as there was no provision in the Central Excise Act for payment of interest on such refund.
It is in the couRs.of hearing before the Supreme Court that the Learned Solicitor General after taking instructions made a statement that the Central Board of Excise and Customs proposes to issue a circular in connection with the payment of interest on all such pre-deposits.
At the time a draft copy of the proposed circular was handed over to the Supreme Court there was no rate of interest specified in the proposal and, therefore, the Supreme Court awarded interest @ 12% per annum.
Therefore, when this Court directed the respondent to pay interest to the appellant in terms of the Circular Bearing No.802/35/204-CX., dated December 8, 2004 on the pre-deposit of the delayed refund within two months from today it has to be construed that this Court meant the rate of interest which was awarded by the Supreme Court in the case of Commissioner of Central Excise v.
ITC Limited which was the rate quantified by the Supreme Court in absence of any statutory provision in the said Act.”
The third submission of Mr.Bharadwaj is equally without any merit.
The judgment cited by him in the case of C.I.T., Bombay versus M/S.Gwalior Rayon Silk Manufacturing Co.LTD.[supra]., does not really support his contention.
It is true that there is no equity in the matter of taxation but that principle is applicable against the Revenue and not against the assessee.
On equitable consideration tax cannot be realized.
In the case cited by Mr.Bharadwaj, the question which arose for consideration was as to whether an internal road was a part of the building.
The assessee was claiming depreciation on road.
Since there was no definition of a building, their Lordships held that road has to be construed as part of the building and therefore, depreciation was allowed.
The last and the alternative submission advanced by Mr.Bharadwaj is equally without any merit.
From the facts and circumstances briefly indicated above, it would appear that it was a mistake on the part of the Commissioner of Customs that he passed an incorrect or illegal adjudicatory order.
Pursuant to the mistake committed by him, the writ petitioner was obliged to pay the amount assessed by him on account of redemption fine and penalty.
The Appellate Authority reversed the order of the Additional Commissioner of Customs and directed refund of the money.
Therefore, it is a case to which the doctrine of actus curiae neminem gravabit should be applied.
By applying the aforesaid doctrine, the Supreme Court in the case of South Eastern Coalfields LTD.versus State of MP, reported in (2003) 8 SCC 64.held as follows: “Once the doctrine of restitution is attracted, the interest is often as normal relief given in restitution.
Such interest is not controlled by the provisions of the Interest Act of 1839 or 1978.”
All the submissions advanced by Mr.Bharadwaj have, thus, been disposed of.
We are of the opinion that the learned Trial Court passed a just order and there is no scope for any interference.
In the result, the appeal fails and is dismissed with costs assessed at 300 gMs.(GIRISH CHANDRA GUPTA, J.) (TARUN KUMAR DAS, J.) sm AR[CR].