Page 117 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] ARIHANT TILES & MARBLES PVT. LTD. v. COMMISSIONER (APPEALS), JODHPUR 75
Provided that where any duty ordered to be refunded under sub-section (2)
of section 11B in respect of an application under sub-section (1) of that sec-
tion made before the date on which the Finance Bill, 1995 receives the as-
sent of the President, is not refunded within three months from such date,
there shall be paid to the applicant interest under this section from the date
immediately after three months from such date, till the date of refund of
such duty.
Explanation. - Where any order of refund is made by the Commissioner
(Appeals), Appellate Tribunal or any court against an order of the Assistant
Commissioner of Central Excise, under sub-section (2) of section 11B, the
order passed by the Commissioner (Appeals), Appellate Tribunal or, as the
case may be, by the court shall be deemed to be an order passed under the
said sub-section (2) for the purposes of this section.
The provision makes it, abundantly, clear that the interest is allowed on delayed
refunds. But the provision is silent about any interest on delayed payment of in-
terest as claimed herein. Learned Counsel for appellant has relied upon Sandvik
Asia Ltd. (supra) case, impressing upon that the Hon’ble Apex Court has allowed
such amount in case of apparent delay. But it is observed that there has been ex-
pressed clarification that such interest only can be claimed by an assessee which
is provided under the statute and no other interest on such statutory interest can
be granted.
The relevant para of the decision of a Division Bench of Hon’ble
Supreme Court while considering a reference doubting correctness of their pre-
vious decision of Sandvik Asia case had held as :
“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 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 paya-
ble within the statutory period.
7. As we have already noticed, in Sandvik case (supra) this Court was con-
sidering the issue whether an assessee who is made to wait for refund of in-
terest 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 facts of
that case, this Court had come to the conclusion that there was an inordi-
nate 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”.
14. The aforesaid shows that in the latter decision of the Larger Bench, it
was held that the decision in the case of Sandvik Asia Ltd. (supra) cannot be
read to mean that Revenue is obliged to pay interest on interest in the event
of its failure to refund the interest payable within the statutory period. The
Apex Court further held that in the peculiar facts and circumstances of the
case of Sandvik Asia Ltd. (supra) the Court had come to the conclusion that
there was inordinate delay on the part of the Government to refund certain
amount, which includes statutory interest and, therefore, directed the Rev-
enue to pay compensation for the same, but not interest on interest.
15. In our view, as per the above referred observations of the Apex Court
in the case of Gujarat Fluoro Chemicals (supra), obligation on the part of the
Government to pay compensation for non-payment of the statutory interest
by way of interest on interest was not approved. Further, in the above re-
ferred decision of the Larger Bench of the Apex Court at paragraph 7, it was
observed that the interest provided under the statute, which may be

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