2005 (6) TMI 35 - HC - Income Tax

Estate Duty Act, 1953 - interest on refunds - whether the Revenue is liable to pay interest on the amount due as refund of estate duty which became payable on account of the orders of the Appellate Tribunal, in the absence of any specific provision in the Estate Duty Act, 1953, for payment of interest on refunds - I am of the considered view that while dealing with the provisions of a taxing statute, an assessee becomes entitled to interest on refunds only if the statute itself specifically provides for interest and not otherwise. - The result of my above finding is that the petitioner is not entitled to interest on the amount of estate duty refunded to her in accordance with order of the Appellate Tribunal.

Issues Involved:
1. Liability of the Revenue to pay interest on the amount due as a refund of estate duty.
2. Interpretation of relevant sections of the Estate Duty Act, 1953.
3. Applicability of equity principles in the absence of specific statutory provisions.
4. Analysis of judicial precedents cited by the petitioner and respondent.

Detailed Analysis:

1. Liability of the Revenue to Pay Interest on Refund:
The central question was whether the Revenue is liable to pay interest on the amount due as a refund of estate duty in the absence of a specific provision in the Estate Duty Act, 1953. The petitioner argued for interest on the refund amount due to the deprivation of the use of money, while the respondent contended that no interest is payable unless expressly provided by the statute.

2. Interpretation of Relevant Sections of the Estate Duty Act, 1953:
The petitioner relied on sections 53(3) and 64(7) of the Estate Duty Act, 1953, to argue that there is no prohibition against paying interest on refunds. Section 53(3) allows for the extension of the period for delivering an account of properties with possible interest payment, while section 64(7) provides for interest on refunds if the amount of any assessment is reduced as a result of a High Court reference. The court, however, found these provisions insufficient to establish a general right to interest on refunds.

3. Applicability of Equity Principles:
The petitioner cited several Supreme Court decisions to support the argument that interest should be payable on refunds based on equity principles. These cases included Executive Engineer, Dhenkanal Minor Irrigation Division v. N.C. Budharaj, South Eastern Coalfields Ltd. v. State of M.P., and National Insurance Co. Ltd. v. Life Insurance Corporation of India. The court distinguished these cases, noting that they dealt with contractual or statutory obligations to pay money, unlike the present case involving a refund under a taxing statute.

4. Analysis of Judicial Precedents:
The court examined the cited precedents and concluded that they did not apply to the context of tax refunds. Specifically, the decision in Modi Industries Ltd. v. CIT was found directly relevant, stating that there is no right to interest on refunds unless explicitly provided by the statute. The court emphasized that taxing statutes operate differently from general principles of equity and contractual obligations.

Conclusion:
The court concluded that the petitioner is not entitled to interest on the refund of estate duty as the Estate Duty Act, 1953, does not specifically provide for such interest. The petition was dismissed without costs, reinforcing the principle that interest on tax refunds is payable only if explicitly provided by the statute.

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