2019 (7) TMI 1993 - HC - VAT and Sales Tax

Calculation of interest on refund claim - relevant date - HELD THAT - The Respondent has no explanation to offer for the failure by the DT T to comply with the legal requirements as mandated by this Court. In I IJM CORPORATION BERHAD, M.V. OMNI PROJECTS (INDIA) LTD., DAIMLER FINANCIAL SERVICES (P) LTD., FEMC- PRATIBHA JOINT VENTURE VERSUS COMMISSIONER OF TRADE TAXES 2017 (11) TMI 1298 - DELHI HIGH COURT this Court held The assessee would be liable to pay tax under sub-section (4) to section 3 if net tax is payable. In case of refund, obviously the assessee is not liable to pay tax. Obligation of the assessee to pay tax and date when tax is payable, and the duty and date on which refund is payable by the Revenue need not coincide and could be different as per the statute. With the law being clear, there can be no possible excuse for the Respondent not paying interest to the Petitioner on the refund amount from 21st July, 2015. The differential interest will now be credited to the account of the Petitioner on or before 31st August, 2019 failing which the Respondent will additionally pay compensation of Rs. 50,000/- to the Petitioner within two weeks thereafter. Petition disposed off.

Summary

Issues:
Interest payable by the Respondent Department of Trade and Taxes (DT&T) on the refund due to the Petitioner under Section 42 (1) (a) of the Delhi Value Added Tax Act, 2004.

Analysis:
The High Court addressed the issue of interest payable by the Respondent Department of Trade and Taxes (DT&T) to the Petitioner on the refund due under the Delhi Value Added Tax Act, 2004. The Petitioner filed a return for the 4th quarter of 2014-2015, claiming a refund of Rs. 27,88,29,335 on 20th May 2015. The DT&T issued the refund order on 27th May 2019, but calculated interest on the refund amount only from 3rd September 2016, not from the due date of the refund. The Court referred to the legal requirements and a previous judgment in IJM Corporation Berhad v. Commissioner of Trade and Taxes (2018) to clarify that interest is payable from the date when the refund was due to be paid, not from the date of filing the return. The Court emphasized that the starting point for payment of interest is when the refund becomes payable, as specified in the Act, and not the date of filing the return.

The Court held that the law was clear regarding the payment of interest on the refund amount and found no excuse for the Respondent's failure to pay interest from the due date. The Court ordered the differential interest to be credited to the Petitioner's account by a specified date, failing which the Respondent would have to pay additional compensation to the Petitioner. The judgment concluded by disposing of the petition in accordance with the terms outlined, ensuring the payment of interest and compensation as required by law.