Does the liability to pay interest, under section 11BB of the Central Excise Act, 1944, begin three months from a) the date of receipt of a refund application or b) the date on which a refund order is made?
Ruling in Ranbaxy Laboratories Ltd v Union of India & Ors, the Supreme Court held that the liability to pay interest under the Central Excise Act begins from the date of expiry of three months from the date the refund application is received.
The dispute between Ranbaxy and the central excise department was triggered by unsuccessful claims for rebate of duty, amounting to ₹48 million (US$900,000), made between April and May 2003.
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Following appeals filed before the commissioner of appeals (who ruled in favour of Ranbaxy) and the Customs, Excise and Service Tax Appellate Tribunal, the Ministry of Finance had decided that Ranbaxy was not entitled to interest under section 11BB.
This prompted an appeal to Delhi High Court, but the court ruled in favour of the excise department.
However, a separate appeal to Bombay High Court produced a conflicting response with the court ruling for Ranbaxy.
While overruling the Delhi High Court judgment the Supreme Court observed that “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”.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
