Citizens Entitled to Interest on Lost Stamp Paper Refund, Govt Cannot Retain Money Without Legal Basis: Supreme Court [Read Judgement]
Considering the principles of restitution and unjust enrichment, the Supreme Court ruled that citizens are entitled to interest on lost stamp paper refunds
Supreme Court – Stamp paper refund – Legal money retention – Taxscan
Supreme Court – Stamp paper refund – Legal money retention – Taxscan
In a recent ruling, the Supreme Court of India ruled that citizens are entitled to interest on refunds for lost stamp paper. The court also explained that the government cannot retain money without a legal basis.
Dr. Poornima Advani and her spouse (appellants) sought a refund of Rs. 28,10,000 in stamp duty after their e-stamp paper was lost before it could be used in a property transaction. The couple had purchased a new e-stamp paper and completed the transaction, but they argued that the lost stamp duty amount should be refunded since it was never utilized.
The Collector of Stamps rejected their application for a refund, citing the absence of a statutory provision allowing refunds for lost e-stamp papers. The appellants then approached the Delhi High Court, where a Single Judge ruled in their favor, directing a refund of the principal amount.
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The court denied interest on the sum. The appellants then filed a Letters Patent Appeal (LPA) seeking interest, but the division bench dismissed the appeal, stating that the issue was not raised before the Single Judge.
Aggrieved, the appellants moved to the Supreme Court, arguing that interest was compensation for the deprivation of their rightful money and that the government had unjustly enriched itself by withholding the refund for an extended period. The government, in defense, argued that interest on refunds was not provided for in the Stamp Act and that the claim for interest was made too late in the proceedings.
The bench comprising Justices J.B. Pardiwala and R. Mahadevan explained that interest is a natural accretion on capital and serves as compensation for the delay in returning money lawfully owed. The court referred to the ONGC Ltd. v. Commissioner of Customs Mumbai (2007) case, which upheld the principle of restitution, directing that when the government unjustly retains money, it must refund it with interest.
In Union of India v. Tata Chemicals Ltd. (2014), the Supreme Court held that money received and retained without right carries an obligation to pay interest, reinforcing that the state cannot benefit from undue enrichment at the expense of its citizens.
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In light of the above-referred cases, the court directed the government to pay Rs. 4,35,968 in interest on the refund amount and clarified that even in the absence of an explicit statutory provision, principles of restitution and fairness necessitate the payment of interest.
To Read the full text of the Order CLICK HERE
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