2019 (7) TMI 1202 - HC - VAT and Sales Tax

Interest on refund - starting date of limitation - Section 42 of the DVAT Act - HELD THAT - The wording of Section 42(1) of DVAT Act is unambiguous. It talks of the two dates i.e. date the refund was due to be paid to the person and until the date‟ on which the refund is given‟. The word given‟ should in the context of the provision mean, the date on which the refund amount is actually received by the Petitioner and not the date simply on which the refund order is issued. As a matter of routine, the Court notes that invariably, the refund amount is not received by an Assessee on the date of issuance of the refund order. That date is usually a later date - in the present case, the Respondent has not disputed the fact that the refund amount was in fact received by the Petitioner only on 14th September, 2017. The Petitioner is entitled to interest on the refund amount issued by the order dated 25th August, 2017 for the period from 11th September, 2015 till 14th September, 2017. The said interest amount calculated in terms of Section 42 read with Rule 34 and 36 of the DVAT Rules will be credited to the Petitioner s account not later than 16th August, 2019. Petition disposed off.

Summary

Issues:
1. Obligation of the Respondent to pay interest on the refund issued to the Petitioner.

Analysis:
The judgment revolves around the issue of the obligation of the Respondent to pay interest on the refund issued to the Petitioner. The Petitioner, a registered dealer under the Delhi Value Added Tax Act, filed a return claiming a refund on 10th July 2015 for the fourth quarter of 2014. The refund claimed was &8377; 2,56,57,120, and the refund allowed was &8377; 1,30,96,335. The Petitioner filed a petition due to the Respondents' failure to pay interest for the period between 11th September 2015 and 14th September 2017, the date when the refund amount was received. The Respondent contended that the notice issued on 11th September 2015 was within the two-month period after filing the revised return, which the court rejected as untenable.

The court referred to Section 38(3) and Section 38(7) of the DVAT Act, emphasizing that interest would be payable after the period specified for the refund to become due. The court cited a previous decision to clarify that interest is payable from the due date of refund payment. The Respondents' argument that the Petitioner was not entitled to interest on the refund was rejected by the court. The court further explained the interpretation of Section 39(1) of the DVAT Act, affirming that interest would begin from the period specified in Section 38(3) of the Act.

Regarding the actual receipt of the refund amount, the court held that the Petitioner is entitled to interest on the refund amount from 11th September 2015 till 14th September 2017. The court interpreted Section 42(1) of the DVAT Act, stating that interest is payable until the date the refund amount is actually received, not just the date of the refund order issuance. The court directed the interest amount to be credited to the Petitioner's account by a specified date and mandated compensation if not done so. Consequently, the petition was disposed of in favor of the Petitioner.