M/S Gmr Hospitality And Retail LTD vs. Union Of INDIA

Held

The Court held that the Order-in-Appeal dated 30.11.2021, which set aside the rejection of the petitioner's refund claim, continues to hold the field as it has neither been stayed nor set aside by a competent forum. The pendency of an appeal before the CESTAT, without any interim order, does not negate the operative force of the appellate order. The Court found that the respondents could not rely on a subsequent refund application (dated 25.02.2019) to avoid liability for statutory interest on the delay that occurred prior to it, especially when an earlier refund application was filed. Therefore, the respondents are duty-bound to pay interest on the delayed refund as mandated under the Act. The Court directed respondents Nos. 2 and 3 to pay interest to the petitioner for the delayed period of refund, strictly in terms of the statutory provisions, subject to the outcome of the appeal pending before the CESTAT. No issue was expressly left undecided.

Facts

The petitioner, M/s GMR Hospitality and Retail Ltd., sought a writ of mandamus directing the respondents to pay interest of Rs. 1,80,04,416 on delayed refunds. The petitioner had filed refund applications on 11.06.2018 and 19.06.2018 for the period October 2016 to June 2017, and another on 26.02.2019 for April 2010 to September 2016. The initial refund claim was rejected by the Deputy Commissioner, but the Commissioner (Appeals) set aside this order on 30.11.2021, holding the petitioner entitled to the refund. A High-Power Committee reviewed this and recommended an appeal, which was filed before the CESTAT but remains pending. The respondents released the refund amount but did not pay interest for the delay. The petitioner's previous writ petition challenging a show-cause notice for recovery of the refunded amount was allowed, with the court noting the pending CESTAT appeal.

Key Issues

1. Whether the petitioner is entitled to interest on the delayed refund, considering the Order-in-Appeal dated 30.11.2021 remains operative in the absence of a stay or reversal by a higher forum? Petitioner's arguments: The petitioner contended that the Order-in-Appeal dated 30.11.2021, which allowed their refund claim, is still in force as no stay has been granted by the CESTAT, where the department's appeal is pending. Therefore, the respondents are statutorily obligated to pay interest on the delayed refund as per the provisions of the Act. They argued that the respondents cannot rely on a subsequent refund application to avoid liability for interest on the delay that occurred prior to it. Respondents' arguments: The respondents relied on an application dated 08.02.2022 to contend that the refund was sanctioned on 12.04.2022 without delay. They did not explicitly argue against the entitlement to interest if a delay is established, but rather sought to demonstrate no delay occurred based on a later application.