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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2194 OF 2022
M & G Global Services Pvt. Ltd a company incorporated under the
Companies Act, 1956, having its office at
Prudential House,Central Avenue, Hiranandani Business Park, Powai, Mumbai 400 076 … Petitioner
JUDGMENT
1. The Union of India through the Ministry of Finance, Department of Revenue, North Block, New Delhi
2. The Commissioner, CGST & Central Excise, Navi Mumbai having his office at 16th Floor, Satra Plaza, Palm Beach Road, Sector-19D, Vashi Navi Mumbai-400 705
3. The Assistant Commissioner CGST & CX, Navi Mumbai having his office at 16th Floor, Satra Plaza, Palm Beach Road, Sector-19D, Vashi Navi Mumbai-400 705 … Respondents Shri Prasad Paranjape i/b. Lumiere Law Partners for the Petitioner. Shri Dhananjay B. Deshmukh for the Respondents. CORAM: K.R.SHRIRAM & GAURI GODSE, JJ. DATE: 23rd AUGUST, 2022.
ORAL JUDGMENT (K.R.SHRIRAM, J.)
1. Petitioner is engaged in the business of providing Information Technology enabled Services to its group entities located outside India. Petitioner in order to provide the output services, receives various input services and avails the credit for service tax paid thereat under Rule 3 of the CENVAT Credit Rules, 2004 [‘Credit Rules’]. Petitioner’s services are exported without payment of service tax which results in accumulation of CENVAT credit of service tax paid on input services.
2. It is petitioner’s case that in terms of Rule 5 of the Credit Rules, petitioner, as provider of the output service, that are exported, is entitled to claim refund of the credit of the service tax paid on input services that remained unutilised. There are notifications issued in that regard under Rule 5 of the Credit Rules for claiming of refund of unutilised credit.
3. Petitioner filed eight refund applications as detailed in the petition. Admittedly these refund applications have been processed and refund has been granted. It is petitioner’s case that as per provisions of Section 11BB of the Central Excise Act, 1944 [“The Act”] if any duty ordered to be refunded is not refunded within three months from the date of receipt of the application there shall be paid to that applicant interest at such rate, not below five percent and not exceeding thirty percent per annum that would be fixed for the time being by the Central Government, by notification in the Official Gazette. Such interest will become payable 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.
4. We are informed that current rate fixed by the Central Government is 6% per annum.
5. Petitioner is only seeking interest on the refund amount because it is petitioner’s case that refund was issued after the expiry of three months.
6. Shri Deshmukh appearing for respondent did not dispute any of the facts mentioned above, but according to Shri Deshmukh interest was not processed because there were certain defects in the application which defects have been subsequently rectified.
7. Shri Deshmukh, relying upon an affidavit in reply of one Rohitkumar Bhaisare affirmed on 16th June, 2021, submitted that application filed by petitioner was incomplete to process the claim, additional documents with reference to queries in respect of the application were submitted by petitioner on 10th June, 2019, another query memo dated 8th July, 2019 was issued to petitioner and an opportunity to have a personal hearing with reference to queries raised were also given. Shri Deshmukh submitted that therefore the delay could not be attributed to respondent and the delay was only because of petitioner submitting incomplete application. Therefore, the question of paying any interest would not arise.
8. Shri Paranjape responded to this argument of Shri Deshmukh by submitting that three months period provided to process the claim was to enable respondent to raise objections / point out defects in the application to the applicant and if respondent would take its own time, in this case almost a year later objections were raised, respondent cannot raise the defence application being incomplete. Shri Paranjape submitted that if the applications were so defective, first of all respondent would not have granted refund and secondly respondent could have rejected the application.
9. Shri Paranjape relied upon judgment of the Apex Court in Union of India vs. Hamdard (WAQF) Laboratories[1] where paragraph 9, 11, 12, 14, 17, 18 and 21 read as under: 1 2016 (333) E.L.T. 193 (SC) “9. Presently to the flash back. In pursuance of the order passed by the competent authority, an amount of Rs.3,74,00,000/- was refunded by cheque no.639266 dated 15.11.2000 payable at PNB Navyug Market, Ghaziabad. As no interest was paid by the appellant, the respondent filed a Civil Miscellaneous Writ Petition No. 249 of 2001 before the High Court of Judicature at Allahabad. The Division Bench, considered the judgment rendered by this Court in Civil Appeal No.7766 of 1995, took note of the time prescribed for disposal of the application for refund, the language employed in Section 11-BB of the Central Excise Act, 1944 (for short, 'the Act') and further appreciating the conduct of the parties, opined that the liability for payment of interest is statutory and it is the bounden duty of the Assistant Commissioner to pay interest from 26th November, 1999 till 15th November, 2000 at the rate specified under Section 11-BB of the Act. The aforesaid conclusion impelled the Division Bench to allow the writ petition with costs which was assessed at Rs.10,000/-. The said order is the subject matter of appeal by special leave. xxxxxxxxxx
11. The facts which we have adumbrated herein-above are not in dispute. It is contended by Mr. Adhyaru, learned senior counsel appearing for the Revenue that Section 11-B which deals with grant of refund of duty has to be strictly construed and, if there is no compliance with the conditions enumerated therein, the application has to be rejected. Elucidating the said argument, learned senior counsel would submit that if there is a defective application or an application not meeting the requisite criteria stipulated under the statutory provision, it is to be held that there is no application in the eye of law and hence, the period has to commence from the date when the defects are rectified. In essence, the submission is that the prescription of three months in the said provision has to commence when the application is appositely rectified to bring it in order, and there has to be adjudication to arrive at the necessitous conclusions as enshrined in the said provision, otherwise, the persons who are not entitled to get refund would be in a position to avail the benefit of refund and the interest on technical score. To buttress the said submission, he has paid immense stress on the factual matrix. It is urged by him that there was no proper application and, in fact, when the defects were communicated, they were not appositely corrected and things only came to light at the time of adjudication and thereafter in quite promptitude, the amount was paid by way of a cheque and hence, the claim of interest is absolutely unjustified and resultantly, the grant of interest by the High Court is wholly unsustainable.
12. Mr. Upadhyay, learned senior counsel appearing for the respondent would contend that in the absence of a particular form in praesenti the application was in order from the inception and, in any case, the period commences from the date of submission of the application which is required to be filed within one year. It is put forth by him that the time runs from that day and it is open to the Revenue to ask the assessee to remove the defects and if the defects are not removed it can reject the application but it has to be done within the statutory period, but under no circumstances, there can be an assumed extension of time by the Revenue. To bolster the said submission, reliance has been placed on Ranbaxy Laboratories Limited vs. Union of India & Ors.
14. Section 11-BB deals with interest of delayed refunds. The said provision is extracted below:- Section 11-BB Interest on delayed refunds.--If any duty ordered to be refunded under sub-section (2) of section 11B to any 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 per cent and not exceeding thirty per cent 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 11B in respect of an application under subsection (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 Central Excise or Deputy Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, by the court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section.”
17. The seminal issue is be whether there has been delay in grant of refund and consequently, whether the respondent-assessee is entitled to interest. Keeping in view the enumerated facts, the submissions canvassed and the provisions referred to, it is necessary to appreciate the principle stated in Ranbaxy Laboratories Limited (supra). In the said case, the question arose whether the liability of the Revenue to pay interest under Section 11-BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made. The two-Judge Bench after analyzing the provision has held as follows:- “12. It is manifest from the afore extracted provisions that Section 11-BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11- BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act.
13. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11-BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Sub-section (1) of Section 11-BB of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11-BB of the Act becomes payable.
18. While dealing with the said facet, the Court also referred to circular dated 01.10.2002 issued by the Central Board of Excise and Customs, New Delhi whereby a direction was issued to fix responsibility for not disposing of the refund/rebate claims within three months from the date of receipt of the application. Appreciating the import of the said circular, the Court opined as follows:- “12. Thus, ever since Section 11-BB was inserted in the Act with effect from 26th May 1995, the department has maintained a consistent stand about its interpretation. Explaining the intent, import and the manner in which it is to be implemented, the Circulars clearly state that the relevant date in this regard is the expiry of three months from the date of receipt of the application under Section 11B(1) of the Act.” The ultimate conclusion was recorded thus:- “19. In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.”
21. As far the said principles are concerned, they are binding on us. But the facts in the case at hand are quite different. It is not a case where the assessee is claiming automatic refund. It is a case that pertains to grant of interest where the refund has been granted. The grievance pertains to delineation by the competent authority in a procrastinated manner. In our considered opinion, the principle laid down in Ranbaxy Laboratories Limited (supra) would apply on all fours to the case at hand. It is obligatory on the part of the Revenue to intimate the assessee to remove the deficiencies in the application within two days and, in any event, if there are still deficiencies, it can proceed with adjudication and reject the application for refund. The adjudicatory process by no stretch of imagination can be carried on beyond three months. It is required to be concluded within three months. The decision in Ranbaxy Laboratories Limited (supra) commends us and we respectfully concur with the same.
10. Like in the case of Hamdard (supra) here also is a case that pertains to grant of interest where the refund has been granted. In our view the principle laid down in Hamdard (supra) would squarely apply to the facts of the present case. It was obligatory on the part of the revenue to intimate to petitioner to remove the deficiency in the application immediately (in Hamdard (supra) it says within two days) and in any event if there were still deficiencies, Revenue could have proceeded with adjudication and rejected the application for refund. Adopting the expression used by the Apex Court in Hamdard (supra), “the adjudicatory process by most stretch of imagination can be carried out beyond three months. It is required to be concluded within three months.”
11. It will also be useful to reproduce paragraph 9, 10, 14 and 15 of another judgment of the Apex Court in Ranbaxy Laboratories vs. Union of India[2]. “9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three months from the date of receipt of the application.The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under Subsection (1) of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under Section 11BB of the Act becomes payable.
10. It is a well settled proposition of law that a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied and there is no room for any intendment. (See: Cape Brandy Syndicate Vs. Inland Revenue Commissioners[4] and Ajmera Housing Corporation 2 2016 (333) E.L.T. 3 (S.C.) & Anr. Vs. Commissioner of Income Tax[5].). 4 [1921] 1 K.B. 64 5 (2010) 8 SCC 739.
14. At this stage, reference may be made to the decision of this Court in Shreeji Colour Chem Industries (supra), relied upon by the Delhi High Court. It is evident from a bare reading of the decision that insofar as the reckoning of the period for the purpose of payment of interest under Section 11BB of the Act is concerned, emphasis has been laid on the date of receipt of application for refund. In that case, having noted that application by the assessee requesting for refund, was filed before the Assistant Commissioner on 12th January 2004, the Court directed payment of Statutory interest under the said Section from 12th April 2004 i.e. after the expiry of a period of three months from the date of receipt of the application. Thus, the said decision is of no avail to the revenue.
15. In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.” (Emphasis supplied)
11. As held by the Apex Court in Ranbaxy (supra), a fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision; there is nothing to be read in; nothing to be implied; and there is no room for any of intendment. The liability of the revenue to pay interest under Section 11BB of the Act commenced from the date of expiry of three months from the date of receipt of application for refund under Section 11BB(1) of the Act.
12. The division bench of this Court in Swaraj Mazda Limited vs. Union of India[3] also held that perusal of Section 11BB shows that if any duty recovered is found to be refundable, still the payment is not made within a period of three months from the receipt of application for refund then interest is liable to be paid. Even in that case revenue had taken the stand that the applications for refunds initially filed by petitioner were incomplete. The Court rejected this objections and held interest was payable on the refund. Paragraph 2 and 8 of the said judgment Swaraj Mazda (supra) reads as under:
13. In the circumstances, in our view the petition has to succeed.
14. The respondent shall pay interest to petitioner in compliance with provisions of Section 11BB of the Act for the period after the expiry of three months from the date of respective applications till the date of payment of refund amount in accordance with law.
15. Interest shall be paid within four weeks of receiving authenticate (not certified) copy of this order at the prevailing rate as notified by the Central Government for the applicable period.
16. Petition disposed. No order as to costs. Certified copy expedited. [GAURI GODSE, J.] [K.R.SHRIRAM, J.]