The Delhi High Court granted the interest on refund as the interest allowable on delayed refund under the Delhi Sales Tax Act, 1975 on expiry of 90 days from date of claim. The court disposed of the petition directing the respondents to pay interest @1.5% per month on the refund amount of Rs. 20,18,729/- for the period of three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner.
Tarapore & Co, the petitioner prayed to direct the respondents to refund an amount in the sum of Rs. 20,18,729/- besides the statutory rate of interests @1% per month for a period of 90 days from the date the refund was due and @1.5% per month after the expiry of 90 days.
An assessment order was framed whereby petitioner was found entitled to a refund of Rs. 20,18,729/-. Said refund order was passed under Section 16 of the Delhi Sales Tax Act, 1975 [“the Act”] read with Section 23 of the said Act. During the pendency of the subject proceedings, refund in the sum of Rs. 20,18,729/- has been granted to the petitioner on 18.05.2022 however, without any interests. The surviving issue in the present petition is with regard to the interest to be paid to the petitioner on the delayed refund and period thereof.
Section 30(3) of the Act stipulates that no claim for refund would be allowed unless it is made within 12 months from the date of the order giving rise to claim of such refund becoming due. It was an admitted position that refund became due to the petitioner by the framing of assessment on 30.03.2006. Petitioner, thereafter, made a claim in terms of Section 30(3) on 05.05.2006. Said claim remained pending and was not processed by the department. As per the petitioner, petitioner made several requests and demands, however, claim was neither processed nor rejected till the petitioner approached this Court by way of subject petition on 19.08.2019.
As per the petitioner, since the petitioner had made claim in terms of Section 30(3) of the Act within a period of 12 months and there was unexplainable delay on the part of the respondents to refund the amount, they are liable to pay interests as per Section 30(4) of the Act.
Counsel for respondents submitted that the petitioner approached the Court with a substantial delay of nearly 13 years and as such, the petitioner cannot benefit for the said period on account of interest. Counsel submitted that though rate of interest stipulated in the Act is 18%, it was subsequently repealed and Delhi Value Added Tax Act, 2004 was enacted, which mandated delay refund with interest @6% per annum. Petitioner should not be sanctioned interest @18%.
A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja held that petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. Since the delay is beyond the period of one month as provided under Section 30(4), the rate of interest applicable would be 1.5% per month.
The court disposed of the petition directing the respondents to pay interest @1.5% per month on the refund amount of Rs. 20,18,729/- for the period of three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner. Interests be paid within a period of four weeks.
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