The Delhi High Court directed to pay simple interest at 6 % on the amount of refund allowed under the Delhi Value Added Tax Act, ( DVAT ) 2004. The Refund Claim was delayed and sanctioned without interest.
M/S Satbir Filing Station, the petitioner seeks computation/quantification of interest on the delayed refund in terms of Section 42 of Delhi Value Added Tax Act, 2017 w.e.f. 01.06.2015 i.e. expiry of two months from the date of filing of refund of the application till 23.05.2023 when the refund was disbursed to the petitioner.
Section 38 of the Delhi Value Added Tax Act, 2004 states that the Commissioner shall refund to a person the amount of tax, penalty and interest if paid in excess within two months after the date on which the return was furnished or claim for the refund was made. In the instant case, the petitioner had made an application for a refund on 31.03.2015 by filing a VAT Return for the Fourth Quarter of 2013-2014. Accordingly, in terms of Section 38 (3) (a) (ii), the refund claim becomes due on expiry of two months w.e.f 01.06.2015.
The refund has been sanctioned and disbursed to the petitioner on 23.05.2023, however, without any interest. It was evident that Section 42 (1) of the Act mandates grant of simple interest at the annual rate notified by the Government from time to time, to a person who is found entitled to refund in case of any delayed payment
The court found that the refund had been sanctioned without any interest. It is an admitted position that annual rate notified by the Government for the purposes of Section 42 of the Act is simple interest @ 6% per annum.
A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja disposed of the petition directing the respondents to consider the claim of petitioner for grant of interest on the delayed refund in terms of Section 42 of the Act.
The petitioner is found entitled to interest the same be sanctioned and disbursed to the petitioner within four weeks.
Further held that in case, the proper officer is of the view that interest is not payable a speaking order be communicated to the petitioner within four weeks.
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