Kothari Oil Products Company vs State of Gujarat and Others

S. Chhatterji, J.—Heard Mr. Kaji, learned counsel for the petition, and Mr. Mehta, learned counsel for the respondents.

At the outset it is brought to our notice that though the matter is on board, the records from the office are not traceable in spite of various searches. Since the matter is an old one both the learned advocates for the parties have agreed and consented to produce the relevant papers and copies thereof and the office is directed to reconstruct the record on the basis of such copies and other materials.

On the score of merit it appears that the petitioner has since prayed, inter alia, as under :

"(A) That this honourable Court be pleased to issue writ of mandamus or any other appropriate writ, direction or order under article 226 of the Constitution of India directing the respondents to compensate the petitioner by paying at 24 per cent per annum or such other rate which this honourable Court thinks fit and proper on the amounts of refunds received by it for the periods 1972-73, 1973-74 and 1974-75 as per the details given in exhibit A above from the date of filing of the appeal to the date refunds have been received.

(B) That this honourable Court be further pleased to issue a writ of mandamus or any appropriate writ, direction or order under article 226 of the Constitution of India directing the 4th and 5th respondents to finalise the assessment proceedings for the periods 1975-76 and 1976-77 expeditiously and pass necessary assessment orders and issue refunds, if any."

The only point Mr. Kaji strongly emphasizes before us is that in view of annexure A as to the statement of dates and hearing of appeals to refund having obtained there is a long delay in disposal of the appeal and passing the order and therefore, the petitioner is entitled to interest after the order is made. If there was no delay in disposal of the appeal and/or assessment order, the petitioner might have obtained the refund long before and as a consequence thereof the petitioner is asking for damages and interest thereby upon the refund retrospectively.

Mr. Kaji had drawn the attention of this Court to a decision reported in D.J. Works Vs. Deputy Commissioner of Income Tax, . There the Division Bench found that section 214 of the Income Tax Act, 1961, itself recognises in principle the liability to pay interest on the amount of tax paid in excess of the amount of assessed tax which is retained by the Government. Interest on the excess amount is payable at the rate of 15 per cent from the first day of the year of assessment to the date of regular assessment. The Legislature itself has considered it fair and reasonable to award interest on the amount paid in excess which has been retained by the Government. The same principle should be extended to the payment of interest, which has been wrongly withheld by the assessing officer or the Government. It is the duty of the assessing officer to award interest on the excess amount of tax paid by the assessee while giving effect to the appellate order and granting refund of the excess amount. If the excess tax paid cannot be retained without payment of interest, so also the interest which is payable thereon cannot be retained without payment of interest. Though there is no specific provision for payment of interest on the interest amount for which no order is passed at the time of passing the order of refund of the excess amount which has been wrongfully retained, interest would be payable at the same rate at which the excess amount carries interest. In other words, the amount payable by way of interest would carry simple interest at the rate of 15 per cent per annum from the date it became payable to the date it is actually paid. Therefore, the Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, on the interest amount which had become due u/s 214(1) of the Act.

Mr. Kaji has drawn an inspiration from the aforesaid judgment though there is no indication in the statute for payment of interest on interest in the instant case. Although there is no statutory limitation to hear the appeal, this Court should take a broad view about the reasonableness as to the disposal of the appeal and in causing delay thereby would cause an attempt to enable the aggrieved party to seek remedies by way of damages to claim interest thereby.

We have carefully considered and examined the argument advanced by Mr. Kaji with great patience and anxiety. It is a case where interest on refund also became due under the Act by a regular policy. The right to receive interest having accrued in the absence of specific provision, this Court can award interest on general principles. However, in this case we do not find that there is any dispute that refund had become due after the order of appellate authority on the order of assessing authority.

Here is a case before us in which delay is disposal of the appeal has caused damages. Our attention is drawn to section 85 of the Gujarat Sales Tax Act, 1969. It is envisaged thereby that no suit, prosecution or other legal proceedings shall lie against any servant of the Government for anything which is in good faith done or intended to be done under this Act or the Rules made thereunder.

If there is no time-limit to dispose of a pending appeal or assessment order and if anybody has not acted contrary to section 85 it is for the petitioner to prove specific acts or bad action against the person concerned; in other words if any act is done contrary thereof should not be resulted by way of vicarious liability of the said person. We also find from the decision reported in Shri. Chet Ram Vashist Vs. Municipal Corporation of Delhi and Another, in the case of Chet Ram Vashist v. Municipal Corporation of Delhi that there is a time-limit within which the Standing Committee is expected to deal with the application. If there is failure to act within the time, then same does not automatically give a right to any person concerned to ask for the deemed grant of the application. Failure to disposal of the appeal in the facts of the case will not give any right on the person to ask for the damages and claim for interest. The petitioner has to prove by specific facts which may be available to him to entertain any disputed questions of fact and consider the question of damages suffered by the petitioner for any specific act of negligence of any recalcitrant officer at the relevant time. Considering all the aspects of the matter, we do not find that the petitioner has succeeded in making out any case which calls for interference of this Court. We do not find any merit in this application. The application is rejected. Rule is discharged. No order as to costs.

Petition dismissed.