2022 (8) TMI 1438 - HC - Income Tax

Refund as determined under the Direct Tax Vivad Se Vishwas Act, 2020 ( VSV Act) - Petitioner also seeks payment of interest @ 9% per annum on delayed payment from the date of adjudication till the date of payment. Admittedly, the petitioner was granted final certificate in Form-5 dated 05th April, 2021 under VSV Act setting forth the particulars of the taxes refundable towards the full and final settlement of tax arrears - Though the due amount has been refunded to the petitioner during the pendency of the present proceedings, the petitioner seeks payment of interest on account of delay in payment. HELD THAT - This Court is of the view that refund due and payable to the assessee is a debt-owed and payable by the revenue. There is no provision in the VSV Act prohibiting award of interest on delayed refund. Consequently, this Court is of the opinion that the VSV Act does not authorise the respondent to either delay or withhold the payment of the refund. As far as the issue of deceased assessee having two PAN numbers is concerned, this Court finds that the petitioner had initially filed a writ petition as the petitioner s application for refund was not being entertained on the ground that the deceased assessee had two PAN numbers. Predecessor Division Bench of this Court vide order dated 25th January, 2021 resolved the said issue by directing the respondents to entertain the petitioner s application for refund on one of the two PAN numbers. Consequently, the said issue had been resolved prior to the issuance of the final certificate determining the refund amount. Further, in pursuance to the final certificate, the respondents asked for a No objection Affidavit from the surviving legal heirs on 31st August, 2021, which was furnished on the next day i.e. 01st September, 2021. Consequently, this Court is of the view that there was no delay in furnishing the No Objection Affidavit of the other surviving legal heir. As far as the technical issue at CPC is concerned, this Court is of the view that the same cannot enure to the benefit of the Tax Department. As held by the Supreme Court in Tata Chemicals Limited 2014 (3) TMI 610 - SUPREME COURT the State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Consequently, this Court is of the view that the petitioner is entitled to interest on the refund amount which was delayed beyond the period of ninety (90) days from the date of determination of the refund amount i.e. 05th April, 2021. As directed that the respondents-revenue shall make payment of simple interest @ 5% per annum on delayed refund amount w.e.f. 05th July, 2021i.e. beyond the period of ninety (90) days from the date of determination of the refund amount on 05th April, 2021 till date of payment i.e. 11th February, 2022. Let the said payment be made within eight weeks.

Summary

Issues:
1. Refund sought under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) for two assessment years.
2. Payment of interest on delayed refund.
3. Dispute over interest payment on refunds under VSV Act.
4. Delay in refund due to deceased assessee having two PAN numbers.
5. No objection Affidavit submission delay.
6. Technical issue at the Central Processing Centre (CPC) causing delay in refund.

Analysis:
1. The petitioner filed a writ petition seeking a refund under the VSV Act for two assessment years, along with interest on the delayed payment. The final certificate for the refund was issued, but the petitioner claimed interest due to the delay in payment.

2. The petitioner argued that interest is a form of compensation for the unauthorized use of collected money, citing the Supreme Court judgment in Union of India vs. Tata Chemicals Limited, (2014) 6 SCC 335. The revenue, on the other hand, contended that no interest is payable on refunds under the VSV Act.

3. The Court held that the refund due to the assessee is a debt owed by the revenue, and there is no provision in the VSV Act prohibiting the payment of interest on delayed refunds. The Act does not authorize the revenue to delay or withhold refund payments.

4. Regarding the deceased assessee having two PAN numbers, the Court noted that the issue was previously resolved by a Division Bench directing the refund application to be processed based on one PAN number, eliminating any delay due to this reason.

5. The delay in submitting the No Objection Affidavit by the surviving legal heir was deemed reasonable as it was furnished promptly after the request, indicating no undue delay on the petitioner's part.

6. The technical issue at the Central Processing Centre (CPC) was considered irrelevant to benefit the Tax Department, and the Court emphasized the obligation to refund money received without right, entitling the petitioner to interest on the delayed refund amount.

7. Consequently, the Court directed the revenue to pay simple interest at 5% per annum on the delayed refund amount from 05th July, 2021 (beyond 90 days from the determination date) till the payment date of 11th February, 2022, to be completed within eight weeks, thereby disposing of the writ petition and related application.