Hry power utility wins 25-year fight for excise duty interest

Chandigarh: In a judgment that closed a chapter spanning nearly a quarter of a century, Punjab and Haryana high court has directed the central govt to pay interest on an excise duty refund delayed for years to Haryana Vidyut Prasaran Nigam Ltd (HVPNL).A division bench comprising Justice Jagmohan Bansal and Justice Amarinder Singh Grewal passed the orders while allowing a petition filed by the state power utility, holding that it was entitled to interest under section 11BB of the Central Excise Act, 1944.
The dispute dates to the late 1980s, when HVPNL deposited over Rs 30 lakh in excise duty under protest following show-cause notices related to the fabrication of steel structure towers. Although the commissioner (appeals) ruled in favour of the company in 1987 and 1990, the refund was not granted promptly. The department pursued the matter before the appellate tribunal and filed reference applications, all of which were eventually dismissed. Despite multiple letters sent between 1989 and 1990, the refund was sanctioned only on Dec 29, 2000. However, the issue of interest on the delayed payment led to further litigation that stretched over two-and-a-half decades. Allowing HVPNL's petition, the HC observed that the duty was deposited under protest and that the company repeatedly sought a refund following favourable appellate orders. The bench observed that the delay in the refund was largely attributable to the department pursuing further appeals. Rejecting the argument that the company failed to submit the refund application in the prescribed format at an earlier stage, the court held that once section 11BB came into force on May 26, 1995, the petitioner became entitled to interest if the refund was not processed within three months. The court ruled that interest must be paid at the rate notified by the govt for the relevant period, calculated after the expiry of three months from the enforcement of the provision. MSID:: 128554842 413 |