The Delhi High Court directed to pay interest for 3 years from filing the petition as there was an unexplainable delay in refunding the amount Under the Delhi Sales Act, 1975. The court disposed of the petition directing the respondents to pay interest @1.5% per month on the refund for the period of three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner.
Tarapore & Co, the petitioner seeks direction to the respondents to refund an amount in the sum of Rs. 20,18,729/- besides the statutory rate of interests @1% per month for 90 days from the date the refund was due and @1.5% per month after the expiry of 90 days.
An assessment order was framed for the assessment year 2004-05, whereby the petitioner was found entitled to a refund of Rs. 20,18,729/-. Said refund order was passed under Section 16 of the Delhi Sales Tax Act, 1975 [ “the Act”] read with Section 23 of the said Act.
During the pendency of the subject proceedings, refund in the sum of Rs. 20,18,729/- has been granted to the petitioner on 18.05.2022 however, without any interest. Section 30(3) of the Act stipulates that no claim for refund would be allowed unless it is made within 12 months from the date of the order giving rise to a claim of such refund becoming due. It is an admitted position that refund became due to the petitioner by the framing of assessment on 30.03.2006.
Petitioner claimed in terms of Section 30(3) on 05.05.2006. Said claim remained pending and was not processed by the department. As per the petitioner, the petitioner made several requests and demands, however, the claim was neither processed nor rejected till the petitioner approached this Court by way of subject petition on 19.08.2019.
As per the petitioner, since the petitioner had made a claim in terms of Section 30(3) of the Act within 12 months and there was unexplainable delay on the part of the respondents to refund the amount, they are liable to pay interests as per Section 30(4) of the Act.
Counsel for respondents submitted that the petitioner approached the Court with a substantial delay of nearly 13 years and as such, the petitioner cannot benefit for the said period on account of interest. Counsel submitted that though the rate of interest stipulated in the Act is 18%, it was subsequently repealed and the Delhi Value Added Tax Act, 2004 was enacted, which mandated delay refund with interest @6% per annum. Petitioner should not be sanctioned interest @18%.
The court held that the petitioner would be entitled to interest for three years immediately preceding the filing of the subject petition till the date payment was made to the petitioner. Since the delay is beyond the period of one month as provided under Section 30(4), the rate of interest applicable would be 1.5% per month.
A division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja disposed of the petition directing the respondents to pay interest @1.5% per month on the refund amount of Rs. 20,18,729/- for three years immediately preceding the filing of the petition till the date of disbursal of refund to the petitioner.
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