Case Law Details
State Of Jharkhand & Ors. Vs Kirloskar Brothers Limited (Supreme Court of India)
Introduction: In a significant verdict, the Supreme Court of India, in the case of State of Jharkhand & Ors. vs Kirloskar Brothers Limited, has directed the payment of interest at 6% on the refund amount under Section 55 of the Jharkhand Value Added Tax Act, 2005 (JVAT Act). The judgment builds upon a previous order dated 28.11.2023, setting the tone for the resolution of disputes related to the refund of the principal amount.
Detailed Analysis: The case revolves around the respondent’s application for refund under the JVAT Act, which was initially rejected and subsequently set aside by the High Court. The Supreme Court, while considering the matter, referred to its earlier order dated 28.11.2023, where it refused to interfere with the direction to refund the principal amount but set aside the payment of interest, citing lack of quantification.
The respondent argued that, unlike the previous case, specific reference to Section 55 of the JVAT Act was made in their matter. Section 55 stipulates the payment of interest for the period starting 90 days after the application for refund. The delay in processing the application, exceeding three years, and subsequent rejection by administrative reasons were highlighted. The High Court, acknowledging the legislative intent, ordered the payment of 6% interest from the lapse of 90 days after the refund application.
The petitioner contested, urging consistency with the earlier order and claiming that the respondent failed to apply for a refund within the stipulated 90 days. Despite the rejection being overturned, they argued against interest from the lapse of the 90-day period.
The Supreme Court, noting the non-compliance of its previous order by the petitioners, emphasized the interest of justice. It directed the payment of 6% interest on the refund amount from 26.04.2023 until realization. The order mandates compliance within four weeks without seeking extensions.
Conclusion: The Supreme Court’s directive in the State of Jharkhand vs Kirloskar Brothers case establishes a precedent for the payment of interest on refund amounts under the JVAT Act. The decision emphasizes the legislative intent for timely resolution of refund applications and underscores the importance of complying with court orders. The interest rate of 6% and the specified timeline for compliance reflect the court’s commitment to upholding justice in tax matters.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
During the course of submissions, our attention was drawn to order dated 28.11.2023 passed by a Co-ordinate Bench of this Court in SLP (C) Diary No. 41193/2023, which reads as under –
“Delay condoned.
Having heard Mr. Arunabh Chowdhury, learned senior counsel for the petitioner(s) in the facts and circumstances of the case, we are not inclined to interfere with regard to the direction issued by the High Court to refund to the respondent/caveator herein an amount of Rs.98,17,880/-, which admittedly is the principal amount, which has to be refunded by the petitioner(s) to the respondent herein.
We, however, find that the High Court has further stated that the refund must be including interest for the period involved. But, there is no quantification of the interest.
In the circumstances, that portion of the direction with regard to payment of interest is set aside.
In view of the lapse of time, the aforesaid payment shall be made by the petitioner(s) herein within a period of four weeks from today without seeking any extension of time either before this Court or before the High Court.
The Special Leave Petition is disposed of accordingly.
Pending application(s) shall stand disposed of.”
Learned counsel for the respondent submitted that distinction between the aforesaid order and this case inasmuch as in this case there is a specific reference to Section 55 of the Jharkhand Value Added Tax Act, 2005 (for short the “JVAT ACT’) indicating that the interest will have to be paid for the period commencing 90 days after the application for refund has been made; that the legislature has intended that refund application should be decided within a period of 90 days, but in the instant case, the application was kept pending for more than three years and, thereafter simply rejected the same, which rejection order has been set aside by the High Court and there being no merit in this special leave petition, the petitioners are seeking to assail the order of the High Court. Therefore, in this case, the High Court having particularly referred to the payment of interest as per Section 55 of the JVAT Act, 6% interest may be paid from the period commencing 90 days after the application for refund is made.
In response to this submission, learned counsel for the petitioner(s) submitted that firstly, having regard to aforesaid order passed by this Court on 28.11.2023, where no direction for payment of interest was made insofar this matter is also concerned which is between the same parties, a consistent order may be made. Secondly, it was submitted that the respondent herein did not make an application for refund within 90 days from the date of demand notice, as per Section 19 of the JVAT Act; that due to administrative reasons there was a delay in rejection of the application. No doubt, the rejection was ultimately challenged by the respondent before the High court and the High Court having set aside the order of rejection. But, interest cannot be payable from lapse of 90 days after making the application for refund. Therefore, it was submitted that portion of the order which referes to Section 55 of the JVAT Act may not be given effect to in this case also as the respondent herein is the very same respondent/Assessee in SLP (C) Diary No. 41193/2023.
Learned counsel for the respondent has brought to our notice the fact that he has instructions to submit that there has been non compliance of order dated 28.11.2023 by the petitioners herein inasmuch as no payment has been received by the very same respondent/Assessee, although, this Court had granted four weeks time from that date without seeking any extension of time either before this Court or before the High Court.
We find that there has been a continuing lapse on the part of the petitioners herein. In the circumstances, we find that the interest of justice would be sub-served, if interest @ 6% on the refund amount is directed to be paid w.e.f. 26.04.2023 till the date of realisation in the instant case.
It is needless to observe that the aforesaid refund amount with interest shall be paid within a period of four weeks from today without seeking any extension of time either before this Court or before the High Court.
The Special Leave Petition is disposed of in the aforesaid terms having regard to the peculiar facts of this case.
Pending application(s) shall stand disposed of.
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