VAT Refund Delayed for Over 15 Years Entitles Interest from 2009: Delhi HC Directs Payment to Leather Traders [Read Order]

In a recent ruling, the Delhi High Court held that a VAT refund delayed for more than fifteen years entitles the dealer to interest from 2009 and directed the department to pay interest to leather traders whose refund was released only in 2025.

Fair Deal Leather Suppliers and Nand Leather Co. had filed VAT returns for the quarter ending 31 March 2009 on 26 April 2009 and claimed a refund of Rs. 2,87,538. An ex parte assessment order was later passed rejecting the refund. The petitioners stated that this order was neither served on them nor uploaded on the portal.

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After learning about the rejection, the petitioners approached the High Court in 2017. In April 2018, the Court allowed them to pursue the appellate remedy and kept the issue of limitation open. The appellate authority remanded the matter in February 2024. After fresh consideration, the assessing authority granted the refund on 14 August 2024, which was credited on 15 January 2025.

The petitioners then approached the High Court seeking interest on the delayed refund. Their counsel argued that under the DVAT Act, refund becomes due within two months of filing the return, and delay attracts interest at six percent per annum.

The department opposed the claim and argued that the delay happened due to the petitioners’ conduct and late pursuit of remedies.

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A Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul observed that the law clearly provides for interest once a refund becomes due. The Court explained that there was no material to show that the delay was caused by the petitioners. The Court also pointed out that service of the earlier assessment order was not established.

The court held that interest is payable from 25 June 2009 till the date of refund in January 2025. The petitions were allowed, and the department was directed to pay interest within twelve weeks.