In a recent ruling, the Allahabad High Court held that once Form 5 was issued under the Vivad se Vishwas ( VSV ) Act, there was no requirement for filing Form 26B for claiming refunds. The court directed the department to proceed with the refund of Rs. 2.19 Crore to Dish TV India.
Dish TV India Ltd. the petitioner filed a writ petition seeking a refund of Rs. 2,19,42,954 determined as refundable under the Vivad Se Vishwas Act, 2020 ( VSV Act ) along with interest under Section 244A of the Income Tax Act, 1961.
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The petitioner filed a TDS return of an initial demand of Rs. 40.56 crores under Sections 201/201(1-A) of the Income Tax Act for the financial year 2008-09. The demand was challenged before the first appellate authority who allowed the appeal and remanded the case for fresh assessment.
After reassessment, the demand was reduced to Rs. 2.19 crores. The petitioner challenged the revised assessment before the Income Tax Appellate Tribunal ( ITAT ) which dismissed the appeal in 2016.
The petitioner went for dispute resolution under the VSV Act in 2021 while the appeal was pending before the High Court. The Central Government accepted the petitioner’s application under the VSV Act and Form 3 was issued confirming the refundable amount of Rs. 2.19 crores.
After completing the required declarations in Form 4 and withdrawing its pending appeal, Form 5 was issued on 20.09.2022, finalizing the refund amount. Despite the issuance of Form 5, the refund was not processed by the respondents.
The petitioner followed up multiple times, but no refund was issued which led to the filing of the present writ petition. During the proceedings, the respondents claimed that the petitioner must submit a refund claim through Form 26B on the TRACES portal.
The petitioner’s counsel argued that the demand for Form 26B was baseless as Form 5 already determined the refund entitlement. The petitioner’s counsel also sought interest in the delayed refund citing judicial precedents that mandate interest in unlawful retention of funds.
The bench comprising Arun Bhansali ( Chief Justice of Allahabad HC ) and Justice Kshitij Shailendra observed that the requirement for Form 26B was unwarranted and unsupported by law after the issuance of Form 5.
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The court rejected the respondent’s interpretation of Section 7 of the VSV Act and held that interest was payable for delays post-issuance of Form 5. The court directed the respondents to refund Rs. 2,19,42,954 along with 6% interest per annum for the delay from 20.12.2022 to the date of actual payment.
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