High Court Directs Central Government to Pay Interest on Decades-Long Delayed Excise Duty Refund
In a landmark ruling that concludes a legal saga spanning nearly twenty-five years, the Punjab and Haryana High Court has issued a directive to the central government, mandating the payment of interest on a significantly delayed excise duty refund owed to Haryana Vidyut Prasaran Nigam Ltd (HVPNL). This judgment underscores the legal obligations of authorities in processing refunds promptly and adhering to statutory timelines.
Judicial Bench Delivers Verdict After Prolonged Litigation
A division bench comprising Justice Jagmohan Bansal and Justice Amarinder Singh Grewal delivered the decisive order while adjudicating a petition filed by the state power utility. The bench firmly held that HVPNL is entitled to interest under section 11BB of the Central Excise Act, 1944, reinforcing the legal framework designed to protect entities from undue delays in refund processes.
Origins of the Dispute: A Case Rooted in the Late 1980s
The contentious dispute traces its origins back to the late 1980s, when HVPNL deposited over Rs 30 lakh in excise duty under protest. This payment followed show-cause notices issued in relation to the fabrication of steel structure towers, marking the beginning of a protracted legal battle.
Despite favorable rulings from the commissioner (appeals) in 1987 and 1990, which supported HVPNL's position, the refund was not granted in a timely manner. The excise department pursued further appeals before the appellate tribunal and filed reference applications, all of which were ultimately dismissed, prolonging the resolution unnecessarily.
Delayed Refund and Subsequent Interest Litigation
Although the refund was eventually sanctioned on December 29, 2000, after multiple letters exchanged between 1989 and 1990, the issue of interest on the delayed payment ignited additional litigation. This secondary dispute extended over two-and-a-half decades, highlighting systemic delays in administrative and judicial processes.
In its ruling, the High Court observed that the duty was deposited under protest and that HVPNL had consistently sought a refund following the favorable appellate orders. The bench attributed the delay largely to the department's persistent pursuit of further appeals, which hindered timely resolution.
Legal Grounds: Section 11BB and Entitlement to Interest
The court rejected arguments suggesting that HVPNL failed to submit the refund application in the prescribed format at an earlier stage. It emphasized that once section 11BB of the Central Excise Act came into force on May 26, 1995, the petitioner became entitled to interest if the refund was not processed within three months.
The bench ruled that interest must be paid at the rate notified by the government for the relevant period, calculated after the expiry of three months from the enforcement of the provision. This decision sets a precedent for similar cases involving delayed refunds and reinforces the accountability of government departments in adhering to statutory deadlines.
Implications and Broader Context
This judgment not only brings closure to a long-standing legal issue but also serves as a reminder of the importance of efficient governance and timely dispute resolution. It highlights the need for public sector entities to be vigilant in pursuing their legal rights and for government departments to avoid unnecessary litigation that prolongs justice.
The ruling is expected to have implications for other cases involving delayed refunds and interest claims, potentially encouraging more prompt action from authorities in similar matters. It underscores the judiciary's role in upholding legal provisions designed to protect entities from administrative delays.
