Holding

Interest on the rebate amount cannot be awarded because the Tribunal had already considered and denied the prayer for interest and there is no statutory provision for such interest.

Summary

The Union of India (Revenue) appealed against a judgment of the Allahabad High Court that had awarded 10% interest to Mis Upper Ganges Sugar & Industries Ltd. on a rebate of Rs.15,07,791 granted for excess sugar production. The Tax Tribunal had allowed the rebate but declined the assessee's prayer for 18% interest. The assessee later applied for interest, which was rejected on the ground that the Central Excises and Salt Act provides no provision for interest. The Supreme Court held that because the Tribunal had already considered and rejected the prayer for interest, the assessee could not re‑assert the claim, and in the absence of any statutory or contractual provision, interest could not be awarded. The Court also criticized the revenue authorities for failing to produce relevant documents during litigation. Consequently, the High Court’s order was set aside and the appeal was allowed.

Issues considered

Whether the assessee is entitled to interest on the rebate amount when the Tax Tribunal had already considered and denied the prayer for interest.
Whether any provision under the Central Excises and Salt Act, 1944, or equity principles permits awarding interest in such circumstances.

Legislation cited

Central Excises and Salt Act, 1944

Subjects

interestrebatecentral excisetax tribunalprocedural negligencestatutory provisionequity

Judgment

A UNION OF INDIA AND ORS.
v.
MIS UPPER GANGES SUGAR AND INDUSTRIES LTD.

JANUARY 5, 2005

B [S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.]

Central Excises and Salt Act, 1944:

Interest-Sugar-Rebate on excess of excess production-Granted partly
C by Assistant Collector-Tribunal allowing the balance claim but not granting
prayer of assessee for interest thereon-Later, assessee filing application
claiming interest on the balance amount of rebate-Held, as the Tribunal had
not granted assessee 's prayer for interest, assessee could not be allowed
interest by claiming it again at a later date.
D Practice and Procedure: Government litigation-Lacking in proper
pleadings and prose.::ution--SLP filed by Revenue before Supreme Court-
Relevant documents not filed with paper books-Nor instructions and relevant
documents supplied to Advocate-on-record---(;ourt noticing these facts in matter
after matter-Such practice deprecated
E
In a claim for rebate on excess of excess production of sugar, the
appellant-assessee was partly allowed the benefit by the Assistant Collector
by his order dated 8.1.1976. Ultimately, the Tax Tribunal, by its order
dated 21. 1.1992, allowed the balance claim. However, the Tax Tribunal
did not grant the prayer of the assessees for 18% interest on the said
F balance amount. Later, the assessee filed an application claiming 18%
interest on the balance amount from 8.1.1976 to 28.1.1992. The claim was
rejected by the Assistant Collector and the order was affirmed by the
Collector (Appeals) as also by the Tax Tribunal. But the High Court
allowed the assessee's writ petition holding that it was entitled to 10%
G interest. Aggrieved, Revenue filed the present appeal.

Allowing the appeal, the Court

HELD: I.I Having already made a prayer and the same not having
been granted by the Tax Tribunal, it was not open to (•the assessee to again
H 140
U.0.1. 1·.UPPER GANGES SUGAR & INDUST!UES LTD. 141

make a claim for interest. 1143-EI A '.'
.)
1.2. Besides, the question whether the assessee was entitled to credit
of the balance amount as claimed, was bona fide agitated. It was only in
1992 that this question was settled by the Tax Tribunal. This, therefore,
is not a case where the money had beeli withheld unjustifiably. Thus, even
presuming, in law interest can be granted on grounds of equity, this is B
not a case where such principles could be applied. 1144-A-BI

2.1. The application of the assessee for interest was not rejected on
• the ground that the interest had not been granted by the Tribunal. It was
merely rejected on the ground that there was no provision under the
Central Excises and Salt Act for payment of interest. If that be so, then
c
in the absence of any provision in the contract or any other statutory
provision, interest could not have been awarded. Even in the SLP before
this Court, there is no ground that interest could not have been claimed
as it had not been granted by the Tribunal. However, this being merely a
question of law cannot be ignored by this Court. [143-E-H) D
2.2. Further, it has been noticed that in matter after matter, relevant
documents have not been filed with the paper books by Revenue
authorities. The Court has been informed that no officer is coming forward
to give any instructions to the counsel or to supply any documents. Even
with the stakes being so high there is apparent callousness and negligence E
on the part of the Revenue authorities. It is hoped that this sorry state of
affairs will get remedied and proper instructions given and documents
supplied to the Advocates-on-Record and the arguing counsel.
[142-H; 143-A-BJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3018of1999. F

From the Judgment and Order dated 16.1.1998 of the Allahabad High
Court in C.M.W.P. No. 583 of 1997.

R. Venkataramani, G. Umapathy, P. Parmeswaran, Ashok Panigrahi
and S. Gowthaman for the Appellants. G

Sudhir Chandra Agarwal, K.V. Vishwanathan, Ms. Gauri Rasgotra,
• · Achintya Dvivedi and Sanjeev K for the Respondent.

The Judgment of the Court was delivered by
H
)

142 SUPREME COURT REPORTS [2005] I S.C.R.

A S.N. VARIAVA, J. This Appeal is against the Judgment of the
Allahabad High Court dated 16th January 1998.

Briefly stated the fact> are as follows.

On 12th October 1974, the Central Government issued Notification No.
B 145 of 1974 granting certain rebates on sugar. On !st August 1975, the
Respondents submitted a claim for Rs. 27,84,474. The Respondents claimed
this amount as a rebate by calculating excess on excess production for the
period I st December 1974 to 30th September 1975. The Assistant Collector
was of the view that the rebate could only be claimed on excess of average
C production. Therefore, by an Order dated 8th January 1976, he allowed a
rebate of only Rs.12, 76,621. .

Th" Respondents filed a Writ Petition No. 762 of 1981 before the
Allahabad High Court claiming credit for the balance amount of Rs.15,07,791.
By an Order dated 7th December 1981, the Respondents were directed to
D exhaust the remedy of Appeal as provided under the statute. The Respondents
then filed an Appeal, which was dismissed on 8th January 1976 by the
Collector (Appeals). The Respondents filed a further Appeal to the Tribunal.
The Tribunal by its Order dated 28th January 1992 held that the rebate was
to be granted on excess of excess production. Thus, the Appeal of the
Respondents was allowed with consequential reliefs, i.e., that they were to
E receive a credit in the sum of Rs.15,07,791 in their PLA Account. Pursuant
to the Order of the Tribunal, the Respondents were given credit in the above
mentioned sum.

On I st May 1993, the Respondents filed an application before the
Assistant Commissioner claiming interest on the sum of Rs.15,07,791 at 18%
F from 8th January 1976 to 28th January 1992. They made this claim on the
ground that they were entitled to compensation for the amount not having
been paid to them earlier. This application was rejected by the Assistant
Collector on 21st December 1993. The Collector (Appeals) dismissed the
Appeal of the Respondents by an Order dated I st August 1994. The
G Respondents filed a further Appeal to the Tribunal, which was also rejected
on 3rd May 1997. The Respondents then filed a Writ Petition in the Allahabad
High Court which has been allowed by the impugned Judgment. It has been
held that the, Respondents are entitled to interest at the rate of 10%.
•
This matter, like so many others on our Board for the last few months,
H indicates the negligent and callous manner in which the Revenue is dealing
...J\

U.0.1. 1·. UPPER GANGES SUGAR & INDUSTRIES LTD. [VARIA VA, J.] 14 3

with litigation. In matter after matter, we have found that relevant documents A
have not been filed with the paper books. Even at the time of hearing neither
the Advocate-on-Record nor arguing Counsel have the relevant documents
with them. In most cases it is the other side which supplies the relevant
documents. On being queried by Court, Counsel frankly states that no officer
is coming forward to give any instructions or supply any documents. Even
with the stakes being so high there is apparent callousness and negligence on B
the part of the Revenue authorities. It is hoped that this sorry state of affairs
will get remedied and proper instructions given and documents supplied to
the Advocates-on-Record and the arguing counsel.

In this matter, the question before the Court is whether the Respondents C
were entitled to interest on the amount of Rs. 15,07, 791. Both parties have
argued at great length and cited a number of auihorities as to when interest
can or cannot be granted. In our view, for the purposes of this case, it is not
necessary to go into the larger question whether or not interest can be granted
for delayed payments.
D
In this case, in our view, there are two reasons why interest could not
have been granted. The Respondents have very fairly handed over to the
Court the Appeal filed by them before the Tax Tribunal and the Order dated
28th January 1992. In the Appeal filed by them, the Respondents had prayed
for interest at the rate of I 8% per annum with effect from 8th January 1976
tiH payment. As already noted above, the Tribunal upheld the contention of E
the Respondents that they were entitled to credit, but the Tribunal did not
grant interest. Having already made a prayer and the same not having been
granted, it was not open to the Respondents to again make a claim for interest.

It must be mentioned that when the Respondents again made a claim F
;,._ for interest, on I st May I993, their claim is not rejected on the ground that
the same has not been granted by the Tribunal. It is merely rejected on the
ground that there is no provision under the Central Excise and Salt Act for
payment of interest. Even in the S.L.P. before this Court there is no ground
that interest could not have been claimed as it had not been granted by the
Tribunal. It is only when Court asked for relevant papers and Respondents G
fairly handed over to the Court copies of their Appeal and the Order of the
Tribunal that it was noticed that such a prayer had been made and had not
been granted. Mr. Sudhir Chandra has submitted that Appellants should not
be allowed to take up this contention as there is no such ground in the SLP.
However, in. our view this is merely a question of law and thus cannot be H
,i...

144 SUPREME COURT REPORTS [2005] I S.C.R.

A ignored by this Count. As the Tribunal had not granted interest, Respondents >-.

cannot be allowed interest by claiming it again at a later date.

The second ground on which the Respondents are not entitled to interest
is that this is not a case where the question, whether they were entitled to the
credit of Rs.15,07,791, was free from doubt. This was a question which was
B bona fide agitated. It is only in 1992 that this question was settled by the Tax
Tribunal. This therefore is not a case where the money had been withheld
unjustifiably. Thus even presuming, in law interest can be granted on grounds
of equity this is not a case where such principles could be applied. If that be fl'
so, then in the absence of any provision in the conwact or any statutory
C provision, interest could not have been awarded.

For the above reasons, the impugned Judgment cannot be sustained. It
is hereby set aside. The Appeal stands allowed. There will however be no
order as to costs.

R.P. Appeal allowed.

.

...