By TIOL News Service

CHENNAI, AUG 28, 2017: BY an order dated 04.11.2016, the petitioner's application for demand of interest on the amount refunded has been restricted only for a period of 41 days calculated from 09.12.2014, the date on which the completed claim for refund was filed.

The petitioner has filed a writ petition challenging this order.

The facts are - Consequent upon the Tribunal order dated 27.12.2010, the petitioner filed an application for refund on 03.03.2011. The department had challenged this order and the appeal was dismissed by the Supreme Court on 11.03.2014.

Pursuant thereto, the respondents sanctioned refund of Rs.9,62,93,597/- and the same was credited into the petitioner's bank account. Even before that, the petitioner had filed an application dated 31.03.2015 for payment of interest. This was followed by a reminder dated 03.08.2016. This application was considered and the impugned order was passed granting interest for 41 days being a sum of Rs.6,48,992/-. This amount has been credited to the petitioner's bank account on 28.09.2016.

It is the case of the petitioner that the impugned order restricting the interest claim to 41 days is erroneous and they are entitled for interest from the date of the application dated 03.03.2011. They further submit that the finding contained in paragraph-15 of the impugned order stating that 114 numbers of challans were submitted by the petitioner to Chennai-V Division only on 09.09.2014 after which the refund claim was processed, is factually an incorrect statement and it is clearly an afterthought.

The Counsel for the Revenue informed that there is no factual inaccuracy in the findings mentioned above i.e the petitioner had submitted the 114 original challans only on 09.09.2014 and restriction of interest to 41 days is, therefore, proper.

It is further submitted that as against the impugned order, the petitioner has an appellate remedy which they have not availed.

The High Court inter alia observed -

++ The issue agitated by the petitioner in this writ petition is purely factual.

++ One more aspect which should be taken note of is that the petitioner's application for refund and other similar cases also appears to have been kept pending awaiting the decision of the Hon'ble Supreme Court before whom the appeal was pending and disposed of only in the month of March 2014. Therefore, the other issue would be whether the Department would be justified in refusing to pay interest for the said period, though the application for refund was complete in all respects. Thus, these issues are purely factual.

++ The factual matrix is yet to be verified which exercise obviously cannot be done in a writ petition especially when the petitioner has an effective alternate remedy by way of an appeal.

++ Therefore, this Court is inclined to direct the petitioner to file an appeal against the impugned order as the appellate authority has jurisdiction to call for the original files, verify the date of application, whether the application was complete in all respects and if it was not so, why it was not returned within 48 hours, … etc. These issues have to be necessarily thrashed out before the appellate authority which is a fact finding authority and would be able to reappreciate the facts which are available on record. Therefore, the petitioner has to necessarily avail the appellate remedy.

The Petition was disposed of by directing the petitioner to present an appeal before the Commissioner (Appeals), Chennai, within a period of sixty days and the appellate authority was directed to entertain the appeal without reference to the limitation and fix an earlier date for hearing and preferably dispose of the appeal within a period of thirty days.

(See 2017-TIOL-1667-HC-MAD-CX)