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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) NO. 11406 of 2008                                                      Commissioner of Income Tax,  Gujarat

..Petitioner(s)

                    Versus

Gujarat Fluoro Chemicals ..Respondent(s)    WITH

SPECIAL LEAVE PETITION (C) No.14048 OF 2012 SPECIAL LEAVE PETITION (C) No.14050 OF 2012 SPECIAL LEAVE PETITION (C) No.14051 OF 2012 SPECIAL LEAVE PETITION (C) No.14049 OF 2012 SPECIAL LEAVE PETITION (C) No.14768 OF 2012 SPECIAL LEAVE PETITION (C) No.20154 OF 2012 SPECIAL LEAVE PETITION (C) No.21851 OF 2012 SPECIAL LEAVE PETITION (C) No.25727 OF 2012 SPECIAL LEAVE PETITION (C) No.27453 OF 2012 SPECIAL LEAVE PETITION (C) No.27454 OF 2012 SPECIAL LEAVE PETITION (C) No.27455 OF 2012 SPECIAL LEAVE PETITION (C) No.27456 OF 2012 SPECIAL LEAVE PETITION (C) No.27457 OF 2012 SPECIAL LEAVE PETITION (C) No.27458 OF 2012 SPECIAL LEAVE PETITION (C) No.27459 OF 2012 SPECIAL LEAVE PETITION (C) No.27460 OF 2012 SPECIAL LEAVE PETITION (C) No.27461 OF 2012 SPECIAL LEAVE PETITION (C) No.27462 OF 2012 SPECIAL LEAVE PETITION (C) No.27463 OF 2012 SPECIAL LEAVE PETITION (C) No.27677 OF 2012 SPECIAL LEAVE PETITION (C) No.5730 OF 2013

CIVIL APPEAL No.6301 OF 2011 CIVIL APPEAL No.2534 OF 2012

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CIVIL APPEAL No.2535 OF 2012 CIVIL APPEAL No.2536 OF 2012 CIVIL APPEAL No.2537 OF 2012 CIVIL APPEAL No.2539 OF 2012 CIVIL APPEAL No.2540 OF 2012 CIVIL APPEAL No.2541 OF 2012 CIVIL APPEAL No.2542 OF 2012 CIVIL APPEAL No.2543 OF 2012 CIVIL APPEAL No.2944 OF 2012 CIVIL APPEAL No.2945 OF 2012 CIVIL APPEAL No.3436 OF 2012 CIVIL APPEAL No.3437 OF 2012 CIVIL APPEAL No.3445 OF 2012 CIVIL APPEAL No.3446 OF 2012 CIVIL APPEAL No.5408 OF 2012 CIVIL APPEAL No.7596 OF 2012 CIVIL APPEAL No.7772 OF 2012 CIVIL APPEAL No.2589 OF 2013 CIVIL APPEAL No.5478 OF 2013 CIVIL APPEAL No.4630 OF 2012 CIVIL APPEAL No.3825 OF 2012 CIVIL APPEAL No.3826 OF 2012 CIVIL APPEAL No.7217 OF 2011 CIVIL APPEAL No.4335 OF 2012 CIVIL APPEAL No.4336 OF 2012 CIVIL APPEAL No.4337 OF 2012 CIVIL APPEAL No.4338 OF 2012 CIVIL APPEAL No.4339 OF 2012 CIVIL APPEAL No.4340 OF 2012 CIVIL APPEAL No.4341 OF 2012 CIVIL APPEAL No.4342 OF 2012 CIVIL APPEAL No.4343 OF 2012 CIVIL APPEAL No.4344 OF 2012 CIVIL APPEAL No.4345 OF 2012 CIVIL APPEAL No.4346 OF 2012 CIVIL APPEAL No.4347 OF 2012 CIVIL APPEAL No.4348 OF 2012 CIVIL APPEAL No.4349 OF 2012 CIVIL APPEAL No.4350 OF 2012 CIVIL APPEAL No.4351 OF 2012 CIVIL APPEAL No.4352 OF 2012 CIVIL APPEAL No.4353 OF 2012

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CIVIL APPEAL No.4354 OF 2012 CIVIL APPEAL No.4355 OF 2012 CIVIL APPEAL No.4356 OF 2012 CIVIL APPEAL No.4357 OF 2012 CIVIL APPEAL No.4358 OF 2012 CIVIL APPEAL No.4359 OF 2012 CIVIL APPEAL No.4360 OF 2012 CIVIL APPEAL No.4361 OF 2012 CIVIL APPEAL No.4362 OF 2012 CIVIL APPEAL No.4363 OF 2012 CIVIL APPEAL No.4364 OF 2012 CIVIL APPEAL No.4365 OF 2012

AND WITH CIVIL APPEAL No.4366 OF 2012

O R D E R 1. Doubting the correctness or otherwise of the  decision of this Court in the case of Sandvik Asia  Limited  vs.  Commissioner  of  Income  Tax  &  Ors.,  

(2006) 2 SCC 508, a bench of two learned Judges has  referred  the  following  question  of  law  for  our  consideration  and  authoritative  pronouncement  by  order dated 28.08.2012:

  "The question which arises in this case  is,  whether  interest  is  payable  by  the  Revenue to the assessee if the aggregate of  installments  of  Advance  Tax  OF  TDS  paid  exceeds the assessed tax?"

2. In  the  aforesaid  order  of  reference,  this  Court  has  briefly  noticed  the  facts  and  the

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discussion  in  Sandvik  case  (supra)  wherein,  the  main issue for consideration and determination by  this Court was, whether the assessee is entitled to  be compensated by the Revenue for delay in payment  of the amount admittedly due to the assessee. This  Court  has  noticed  inter alia the  provisions  of  Section 214 of the Income Tax Act, 1961 (for short  ‘the Act’) and in light of the same has doubted the  correctness  of  the  decision  in  Sandvik  case  (supra).

3. In order to answer the aforesaid issue before  us, we have carefully gone through the judgment of  this Court in Sandvik case (supra) and the order of  reference. We have also considered the submissions  made by the parties to the lis.

4. We would first throw light on the reasoning  and the decision of this Court on the core issue in  Sandvik case (supra). The only issue formulated by  this Court for its consideration and decision was  whether an assessee is entitled to be compensated

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by  the  Income  Tax  Department  for  the  delay  in  paying interest on the refunded amount admittedly  due to the assessee. This Court in the facts of the  said  case  had  noticed  that  there  was  delay  of  various periods, ranging from 12 to 17 years, in  such payment by the Revenue. This Court had further  referred  to  the  several  decisions  which  were  brought  to  its  notice  and  also  referred  to  the  relevant provisions of the Act which provide for  refunds to be made by the Revenue when a superior  forum  directs  refund  of  certain  amounts  to  an  assessee  while  disposing  of  an  appeal,  revision  etc.  

5. Since, there was an inordinate delay on the  part of the Revenue in refunding the amount due to  the assessee this Court had thought it fit that the  assessee  should  be  properly  and  adequately  compensated and therefore in paragraph 51 of the  judgment, the Court while compensating the assessee  had directed the Revenue to pay a compensation by  way of interest for two periods, namely; for the

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Assessment Years 1977-78, 1978-79, 1981-82, 1982-83  in a sum of Rs.40,84,906/- and interest @ 9% from  31.03.1986 to 27.03.1998 and in default, to pay the  penal interest @ 15% per annum for the aforesaid  period.

6. 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 payable within the statutory period.

7. As we have already noticed, in  Sandvik case  (supra) this  Court  was  considering  the  issue  whether an assessee who is made to wait for refund  of  interest  for  decades  be  compensated  for  the  great prejudice caused to it due to the delay in

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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 inordinate 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.

8. Further it is brought to our notice that the  Legislature  by  the  Act  No.  4  of  1988  (w.e.f.  01.04.1989) has inserted Section 244A to the Act  which  provides  for  interest  on  refunds  under  various contingencies.  We clarify that it is only  that interest provided for under the statute which  may be claimed by an assessee from the Revenue and  no other interest on such statutory interest.    

9. With the aforesaid clarification we now refer  back all the matters before a Two Judge Bench of  this Court to consider each case independently and  take an appropriate decision one way or the other.

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Ordered accordingly.                              ....................J.

             [H.L. DATTU]                                 

                     .............................J.          [SUDHANSU JYOTI MUKHOPADHAYA]  

 ....................J.

              [M.Y. EQBAL]               

NEW DELHI, SEPTEMBER 18, 2013.