No Exemption to Interest on Refund Under DTVSV Scheme: Gujarat HC [Read Order]

The Gujarat High Court has held that the interest is payable on refund under Direct Tax Vivad Se Vishwas Act 2020 (DTVSV Scheme) even in absence of the provision.

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Pursuant to the notice issued by the Court, the petitioner Sahil Total Infratech Pvt. Ltd. has received refund of Rs.2,20,41,042/- through ECS on 25.01.2024. It was submitted that the petitioner is also entitled to interest for delayed payment of refund which the petitioner was eligible pursuant to Form-5  issued being the order for full and final settlement of tax arrear under section 5(2) read with section 6 of the Direct Tax Vivad Se Vishwas Act, 2020 dated 07.12.2021. It was submitted that the petitioner received the outstanding refund after almost two years and therefore, the petitioner is entitled to the interest on the delayed payment of refund.

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It was submitted that as the petitioner did not receive the refund, grievance was raised by the petitioner on the public grievance platform on the Income Tax Portal on 15.07.2022 after waiting for a reasonable time for getting the refund from the respondents.mIt was further pointed out that grievance raised by the petitioner on 15.07.2022 was resolved on 02.09.2022 by the portal stating that the Jurisdictional Assessing Officer passed the manual order dated 26.07.2022 with refund of Rs.2,20,41,042/- and the refund could not be deposited for the reason that the bank account was closed.

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The petitioner thereafter again raised the grievance on 28.12.2022 stating that the account has been validated by the petitioner and another grievance was also raised on 29.12.2022 which was resolved directing the petitioner to contact the Jurisdictional Assessing Officer as ITR/Rectification right was transferred.

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The department contended that as the petitioner validated the bank account on 03/09/2023 refund was released from CPC on 24/01/2024 and was credited in the bank account of the petitioner on 29/01/2024. The petitioner is not entitled to any interest on the refund amount either under the DTVSV Act, 2020 or under Section 244 of the Income Tax Act, 1961.

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The division bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that when the petitioner has opted for direct tax for Vivad se Vishwas Scheme 2020 and led the application which was approved by the designated authority and refund order is also passed as per the said scheme on 12/05/2022 by the Jurisdictional Assessing Officer, the petitioner was entitled to the interest on the amount of refund till the same was paid to the petitioner.

Without  considering whether it is a fault on part of the petitioner to validate the bank account or whether any negligence on part of the respondents for not releasing the amount of refund, the court directed the respondents to pay the amount of interest at the rate of 6% per annum as per the calculation provided to us amounting to Rs.22,04,104/- for twenty months from 01/06/2022 to 31/01/2024 considering the entire month on amount of Rs.2,20,41,042/- within a period of three months from the date of receipt of copy of the order.

To Read the full text of the Order CLICK HERE

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