SUN PHARMACEUTICALS INDUSTRIES LTD. Vs. CCE

JUDGEMENT

(1.) THE issue referred to the Larger Bench is as to whether interest on delayed payment of interest is permissible under the provisions of Central Excise Act or not. This reference has arisen on account of the apex court judgment in CE Hyderabad v. ITC Ltd. reported in 2005 (179) ELT 15 and by the Tribunal in the case of Hindustan Motors v. CCE, Calcutta reported in 2003 (56) RLT 192. None has come present on behalf of the appellants before us. However, the ld. counsel has assisted the Bench. We have heard the ld. SDR and the counsel.

(2.) IN CE Hyderabad v. ITC Ltd. (supra), there was delayed refund of pre -deposit and interest at the rate more than 12% was allowed by the Tribunal. The apex Court after referring and making the draft circular submitted by the Revenue regarding payment of interest, as part of the order, upheld the payment of interest to the assessee on delayed payment of pre -deposit, but reduced the interest to 12%. In that case, payment of interest on interest to the assessee was not in issue before the Apex Court and no observations in that regard had been made.

(3.) IN Chimanlal S. Patel V. CIT (supra) the interest on interest was allowed under Section 214(1) of Income Tax Act by the Hon'ble Gujarat High Court, - Keeping in view the language of this section which permitted the payment of interest on interest in a case of delayed refund of excess advance Tax and interest due thereon. Similarly, in Narendra Doshi's case (supra), interest on interest was allowed by the Deputy CIT by relying upon the decision of Hon'ble Gujarat High Court in D.J. Works v. Deputy CIT 1992 ITR 227 which was later on followed by that High Court in Chimanlal S. Patel's case (supra) and on reference against that order of the Deputy CIT, the Hon'ble Madhya Pradesh High Court affirmed the order. When the matter was taken to the Apex Court in civil Appeal No. 2053 of 2000, the court dismissed the same by observing that since the Revenue did not challenge the correctness two decisions of the Gujarat High Court (supra), the principle laid down therein was rightly followed and the High Court correctly answered the reference in affirmative. The Apex Court itself did not examine the merit of the issue regarding grant of interest on interest to an assessee under Section 214 of the income Tax Act or any other Act.