COMMISSIONER OF INCOME TAX, GUJARATversusGUJARAT FLUORO CHEMICALS

                   [2013] 10 S.C.R. 191

      COMMISSIONER OF INCOME TAX, GUJARAT                     A
                             V.
            GUJARAT FLUORO CHEMICALS
   (Special Leave Petition (C) No. 11406 of 2008 etc.)
                  SEPTEMBER 18, 2013
                                                              B
  [H.L. DATIU, SUDHANSU JYOTI MUKHOPADHAYA
               AND M.Y. EQBAL, JJ.]
                                                       ..
     Income Tax Act, 1961 - s. 214 and 244A - Whether
Revenue li~ble to pay interest to assessee, if aggregate of C
instalments of Advance Tax of TDS paid, exceeds the
assessed tax - The question referred by Division Bench of
Supreme Court for consideration - Doubting the correctness
ofjudgment passed in *Sandvik Asia Ltd. case, whereby it was
held that the assessee was entitled to be compensated by the D
Revenue for delay in payment of interest on the amount
admittedly due to the assessee - Held: Jn Sandvik case, the
Court had directed the Revenue to pay compensation for the
delay in payment of statutory interest and the same was not
an interest on interest - s.244A (as inserted by Act No. 4 of E
1988) provides for interest on refunds under various
conti!1gencies - Thus, it is only that interest provided under
the statute which may be claimed by the assessee from the
Revenue and no other interest on such statutory interest -
Question answered accordingly.
                                                               F
    Sandvik Asia Limited vs. Commissioner of Income Tax
and Ors. (2006) 2 sec 508: 2006 (2) SCR 811 - referred
to.
                    Case Law Reference:                       G
    2006 (2) SCR 811         referred to         Para 1
    CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
11406 of 2008.
                      191                                     H
    192      SUPREME COURT REPORTS              [2013] 10 S.C.R.


A        From the Judgment and Order dated 03.07.2007 of the
    High Court of Gujarat at Ahmedabad in Special Civil
    Application No. 12855 of 1994.

                                 WITH

B SLP (C) Nos. 14048, 14050, 14051, 14049, 14768, 20154,
  21851, 25727, 27453, 27454, 27455, 27456, 27457, 27458,
  27459, 27460, 27461, 27462, 27463, 27677 of 2012 & 5730,
  of 2013, C.A. Nos. 6301 of 2011, 2534, 2535, 2536, 2537,
  2539,2540,2541,2542,2543,2944,2945,3436,3437,3445,
C 3446, 5408, 7596, 7772 of 2012, 2589, 5478 of 2013, 4630,
  3825, 3826 of 2012, 7217 of 2011, 4335, 4336, 4337, 4338,
  4339,4340,4341,4342,4343,4344,4345,4346,4347,4348,
  4349,4350,4351,4352,4353,4354,4355,4356,4357,4358,
  4359, 4360, 4361, 4362, 4363, 4364, 4365 & 4366 of 2012.
D
       Rajiv Dutta, R.P. Bhatt, M.S. Syali, Arijit Prasad, Rahul
  Kaushik, Sadhna Sandhu, B.V. Balaram Das, Anil Katiyar,
  Bhargava V. Desai, Shreyas Mehrotra, Priteesh Kapoor, Ranjit
  Raut, Anuj Dhir, Bina Gupta, Mohit Ch~udhary, Harsh Sharma,
E Damini Chawla, Puja Sharma, Akshat Shrivastava, Siddharth
  Shrivastava, Manjeet Kripal Jayashree Wad, Ashish Wad,
  Tamali Wad, Kanika Baweja, Niharika Bapna (for J.S. Wad & -
  Co.), Sunil Kumar Jain, Shiv .Kumar Suri, Rustom B.
  Hathikhanawala, G.C. Srivastava, Preeti Bhardwaj, Vijay
  Kumar, Vabhav Kulkarni, Kavita Jha, Ruby Singh Ahuja, Neha
F Gupta, Naomi Chandra, Manik Karanjawala (for Karanjawala
  & Co.) for the appearing parties.
          The following Order of the Court was delivered

                               ORDER
G
         1. Doubting the correctness or otherwise of the decision
    of this Court in the case of Sandvik Asia Limited vs.
    Commissioner of Income Tax & Ors., (2006) 2 SCC 508, a
    bench of two leamedJudges has referred the following question
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  COMMISSIONER OF INCOME TAX, GUJARAT v.                      193
       GUJARAT FLUORO CHEMICALS
of law for our consideration and authoritative pronouncement          A
by order dated 28.08.2012:

      "The question which arises in this case is, whether interest
     is payable by the Revenue to the assessee if the
     aggregate of installments of Advance Tax OF TDS paid             8
     exceeds the assessed tax?"

     2. In the aforesaid order of reference, this Court has briefly
noticed the facts and the discussion in Sandvik case (supra)
wherein, the main issue for consideration and determination by
this Court was, whether the assessee is entitled to be                C
compensated by the Revenue for delay in payment of the
amount admittedly due to the assessee. This Col.lrt has noticed
inter alia the provisions of Section 214 of the Income Tax Act,
1961 (for short 'the Act') and in light of the same has doubted
the correctness of the decision in Sandvik case (supra).              D

    3. In order to answer the aforesaid issue before us, we
have carefully gone through the judgment of this Court in
Sandvik case (supra) and the order of reference. We have also
considered the submissions made by the parties to the tis.
                                                                      E
     4. We would first throw light on the reasoning and the
decision of this Court on the core issue in Sandvik case
(supra). The only issue formulated by this Court for its
consideration and decision was whether an assessee is entitled
to be compensated by the Income Tax Department for the delay          F
in paying interest on the refunded amount admittedly due to the
assessee. This Court in the facts of the said case had noticed
that there was delay of various periods, ranging from 12 to 17
years, in such payment by the Revenue. This Court had further
referred to the several decisions which were brought to its           G
notice and also referred to the relevant provisions of the Act
which provide for refunds to be made by the Revenue when a
superior forum directs refund of certain amounts to an assessee
while disposing of an appeal, revision etc.
                                                                      H
     194       SUPREME COURT REPORTS                 [2013] 10 S.C.R.


A      5. Since, there was an inordinate delay on the part of the
  Revenue in refunding the amount due to the assessee this
  Court had thought it fit that the assessee should be properly
  and adequately compensated and therefore in paragraph 51
  of the judgment, the Court while compensating the assessee
B had directed the Revenue to pay a compensation by way of
  interest for two periods, namely; for the Assessment Years
  1977-78, 1978-79, 1981-82, 1982-83 in a sum of
  Rs.40,84,906/- and interest @ 9% from 31.03.1986 to
  27.03.1998 and in default, to pay the penal interest@ 15% per
c annum for the aforesaid period.

       6. In our considered view, the aforesaid judgment has been
  misquoted and misinterpreted by the assessees and also by
  the Revenue. They are of the view that in Sandvik case (supra)
  this Court had directed the Revenue to pay interest on the
D statutory interest in case of delay in the payment. In other words,
  the interpretation placed is that the Revenue is obliged to pay
  an interest on interest in the event of its failure to refund the
  interest payable within the statutory period.

E         7. As we have already noticed, in Sandvik case (supra)
     this Court was considering the issue whether an assessee who
     is made to wait for refund of interest for decades be
     compensated for the great prejudice caused to it due to the
     delay in its payment after the lapse of statutory period. In the
F    facts of that case, this Court had come to the conclusion that
     there was an inordinate delay on the part of the Revenue in
     refunding certain amount which included the statutory interest
     and therefore, directed the Revenue to pay compensation for
     the same not an interest on interest.

G          8. Further it is brought to our notice that the Legislature by
      the Act No. 4 of 1988 (w.e. f. 01.04.1989) has inserted Section
      244A to the Act which provides for interest on refunds under
      various contingencies. We clarify that it is only that interest.
    : provided for under the statute which may be claimed by an
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  COMMISS!ONER OF INCOME TAX, GUJARAT v.                     195
       GUJARAT FLUORO CHEMICALS
assessee from the Revenue and no other interest on such             A
statutory interest.

    9. With the aforesaid clarification we now refer back all the
matters before a Two Judge Bench of this Court to consider
each case independently and take an appropriate decision one
                                                                    B
way or the other.

    Ordered accordingly.

K.K.T.                   Matter referred to Two Judge Bench.