The Delhi High Court has recently allowed Interest on the refund of the pre-deposit paid as a statutory requirement for filing appeal.
A two-judge bench comprising Justices Ravindra Bhatt and A K Chawla was hearing a writ petition filed by MRF Ltd.
The petitioner, had succeeded partly in an appeal, which resulted in its claim for exclusion of certain amounts in its taxable turnover. The sole grievance of the petitioner was that , the respondent GST authorities did not permit any interest on pre-deposit remitted during the filing of appeal.
Before the High Court, the petitioner argued that the amounts paid during the interregnum period, i.e. rejection of the turnover discount claimed by the original assessment order resulting in pre-deposit of the amounts before the appellate authority did not amount to payment of tax as it did not bear such character. It was emphasized that the refund ought to have carried interest.
Citing a plethora of judicial decisions, the bench allowed the contentions of the assessee and held that pre-deposit sums which the assessee is compelled to pay to seek recourse to an appellate remedy, do not necessarily bear the stamp or character of tax, especially when it succeeds on the particular plea.
“That being the case, the insistence upon a procedural step, i.e. filing of a form which is purely for the purpose of administrative convenience cannot in any manner fix the period or periods of limitation when the amounts became due on the question of interest. The fact that the amounts were due and payable from the date the appeal was allowed is not in dispute. In these circumstances, the postponement of the period from when interest became calculable is incomprehensive and illogical. For these reasons, the petitioner is entitled to interest calculable from the date when its appeal was allowed by this Court by order dated 14.05.2015. The respondents shall ensure that the amounts are processed and credited to the petitioner’s account within four weeks,” the bench said.
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