2019 (5) TMI 1452 - HC - VAT and Sales Tax

Issuance of already determined refund for the Assessment Year 2002-03, 2005-06, 2007-08 and 2016-17 along with interest - delay in sanction refund due to some technical glitch - HELD THAT - The Court sees no reason why on account of a technical glitch in the system, the refund due to an Assessee should be delayed. It must be remembered that every day s delay would mean interest payable on the refund amount under Section 244-A of the Act. With the refund amount running into crore of rupees, the interest amount would obviously be several lacs of rupees, and all of this is coming out of the exchequer needlessly on account of such glitches in the system. The Respondents will now release the refund amounts that have already been processed and approved in favour of the Petitioner not later than 31st May, 2019. The interest amount due, as of 31st March, 2019 on the aforementioned sums should be credited to the account of the Petitioner positively on or before 30th June, 2019. Petition disposed off.

Summary

Issues:
1. Delay in issuing refunds for Assessment Years 2005-06 and 2007-08.
2. Technical glitch causing delay in refund process.
3. Applicability of interest under Section 244-A of the Income Tax Act, 1961.
4. Court's intervention to ensure timely release of refunds.
5. Comparison with a similar judgment from the High Court of Bombay.

Issue 1: Delay in issuing refunds for Assessment Years 2005-06 and 2007-08
The Petitioner sought directions for the issuance of refunds for Assessment Years 2005-06 and 2007-08, which were still pending despite refunds being issued for other years. The amount due for these years, along with interest, was specified by the Petitioner. The Respondents acknowledged the delay and attributed it to a technical glitch in the system affecting the refund process.

Issue 2: Technical glitch causing delay in refund process
The Respondents informed the Court about a technical glitch preventing the timely issuance of refunds. The glitch was particularly affecting the refund for Assessment Year 2007-08, where the challan was not reflecting in the system. The Petitioner's counsel highlighted that the delay was resulting in additional interest payable on the refund amount under Section 244-A of the Income Tax Act, emphasizing the financial burden on the exchequer due to such system errors.

Issue 3: Applicability of interest under Section 244-A of the Income Tax Act, 1961
The Court emphasized the importance of timely refund disbursement to avoid accruing interest liabilities under Section 244-A. Considering the substantial refund amounts involved, the Court noted that any delay in releasing the refunds would lead to significant interest payments, ultimately burdening the exchequer unnecessarily.

Issue 4: Court's intervention to ensure timely release of refunds
In light of the delay caused by the technical glitch, the Court issued directions for the immediate release of the approved refund amounts to the Petitioner. The Court set deadlines for the release of the refunds and the crediting of interest amounts, irrespective of the system glitch being rectified. The Court clarified that the refund should not be linked with the resolution of the technical issue to expedite the process.

Issue 5: Comparison with a similar judgment from the High Court of Bombay
The Court referenced a judgment from the High Court of Bombay in a similar case involving refund delays. The judgment highlighted that factual aspects should prevail over computer system errors, emphasizing that refunds should not be withheld unnecessarily due to technical issues. Drawing from this precedent, the Court directed the immediate release of refunds to the Petitioner, ensuring compliance with the established timeline.

Overall, the Court's judgment focused on addressing the delay in refund disbursement, emphasizing the importance of timely action to prevent additional financial implications and ensuring the efficient functioning of the refund process under the Income Tax Act, 1961.