RASIKIAL RATILAL GANDHI Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this writ petition, the petitioner seeks a direction to the respondents, Union of India and the Assistant Commissioner of Central Excise, to grant interest to the petitioner on the amount of Rs. 1,01,292. 12 which was refunded to the petitioner pursuant to the order of the Supreme Court. The case of the petitioner is that the above amount was illegally collected from the petitioner by the respondents and retained by them till the refund was made and hence the petitioner is entitled to interest on the amount for the period during which the amount remained with the respondents.

(2.) MR. R. V. Desai, learned Counsel for the respondents, raised a preliminary objection with regard to the maintainability of this writ petition. According to him no writ petition under Article 226 of the Constitution of India seeking relief of payment of interest on the amount of refund made by the Central Excise authorities to the petitioner is maintainable, as there is no statutory provision for grant of such interest. He relies, in support of this contention, on the latest decision of the Supreme Court in the case of (Union of India v. Orient-Enterprises) reported in 1998 (99) E. L. T. 193. Mr. Mahendra Shah, learned Counsel for the petitioner, on the other hand submitted that this objection is not tenable in view of the decision of the Supreme Court in (Mafatlal Industries v. Union of India) reported in 1997 (89) E. L. T. 247 and (Union of India v. E. Mere India) reported in 1998 (97) E. L. T. 218. According to Mr. Shah, though there is no statutory obligation for payment of interest under the Central Excise and Salt Act, 1944 ("the Act") or the Rules framed thereunder, the authorities under that Act have a legal obligation to pay interest for the amount illegally or unauthorisedly retained by them.

(3.) WE have carefully considered the rival submissions on the preliminary objection in regard to the maintainability of this writ petition. The only relief the petitioner seeks in this case is the relief of payment of interest on the refund of the amount paid by the assessee towards excise duty under the Central Excise Act. There is no dispute about the fact that at the material time there was no provision in the Central Excise and Salt Act, 1948 ("central Excise Act") for grant of interest on refund. The question that arises for consideration is whether the courts have power to grant interest in such a case in exercise of power under Article 226 of the Constitution. This controversy, in our opinion, is no more res Integra in view of the recent decision of the Supreme Court in Union of India v. Orient Enterprises (supra ). In that case also the question for consideration of the Supreme Court was whether a writ petition under Article 226 of the Constitution seeking relief of payment of interest on delayed refund of amount paid by the assessee towards customs duty, redemption, fine and penalty under the Customs Act, 1962 was maintainable. The Supreme Court took note of the fact that till the insertion of section 27a in the Customs Act with effect from 1st April 1995 by the Finance Act, 1995 (Act No. 22 of 1995), there was no right under the Customs Act, entitling payment of interest on delayed refund. Such a right was conferred for the first time by the said provision. By the very same Act provision was also made for payment of interest on delayed payment of duty by insertion of section 28-AA. The Supreme Court held that at the material time there having no statutory right entitling assessees to payment of interest on delayed refund, the writ petition filed by them was not for the enforcement of legal right available to them under the statute. It was observed that in such a situation the claim for interest was in the nature of compensation for wrongful retention of money by the customs authorities that was collected from the assesses by way of customs duty, redemption fine and penalty etc. The Supreme Court held that writ petition seeking relief of payment for interest on delayed refund of the amount so collected could not be maintained. The above decision, in our opinion, is complete authority for the proposition that in the absence of a statutory provision for payment of interest on delayed refund no writ petition seeking relief of payment of interest on delayed refund is maintainable. The ratio of this decision equally applies to claim for interest on delayed refund of excise duty because in the Central Excise Act also there was no provision for payment of interest on delayed refund till the insertion of section 11 BB in the Central Excise Act by Finance Act, 1995 (Act No. 22 of 1995) with effect from 1st April 1995.