2020 (3) TMI 377 - HC - Service Tax

Interest on refunds - Revenue rejected the claim with regard to the interest on the refund amount on the ground that no effective steps were taken by the petitioners subsequent to the order passed by the assessing authority - HELD THAT - The assessing authorities orders are of the year 2006 and the respective writ petitions are filed in the year 2017. Even if the petitions are not entertained on the ground of delay, on equity, the petitions are to be considered as the matters pertain to demand of tax amount. Admittedly, the delay cannot come to the aid of the respondents. The respondents have retained the money which belongs to the writ petitioners. Therefore, once the learned Single Judge has ordered for refund of the tax amount, necessarily, interest should follow. The order of the learned Single Judge is not challenged by the respondents authorities. It is only on the question of interest that these appeals are filed. It is only just and appropriate that the interest be awarded on the refund amount as ordered by the learned Single Judge in both the appeals - respondents are directed to pay the interest at the rate as applicable for the respective periods - Appeal disposed off.

Summary

Issues Involved:
Refund of tax amount without interest, Delay in filing writ petitions, Claim for interest on refund amount, Equity in tax matters

Refund of Tax Amount without Interest:
The judgment deals with appeals against an order that partially allowed writ petitions for refund of tax amount but denied interest on the refunded sum. The appellants argued that interest should be granted once the refund is ordered. The Single Judge rejected the interest claim citing the petitioners' alleged inaction post the assessing authority's order. The High Court held that if the assessing authority's orders were from 2006 and writ petitions filed in 2017, the delay should not bar considering the petitions as they pertain to tax demand. The Court emphasized that the delay cannot favor the respondents who retained the petitioners' money. Therefore, the Court ruled that interest must accompany the refund as the respondents did not challenge the refund order.

Delay in Filing Writ Petitions:
The Court acknowledged the delay in filing the writ petitions but highlighted that the delay should not prevent considering the petitions since they involve the demand for tax amount. The Court emphasized that the delay cannot benefit the respondents who held the petitioners' money. Despite the delay, the Court found it equitable to grant the refund with interest as ordered by the Single Judge, as the respondents did not contest the refund order.

Claim for Interest on Refund Amount:
The appellants contended that interest should be granted on the refunded tax amount. The Single Judge rejected this claim, citing the petitioners' alleged lack of action after the assessing authority's order. The High Court disagreed, emphasizing that interest should be awarded along with the refund as the respondents did not challenge the refund order. The Court directed the respondents to pay interest at the applicable rate for the respective periods.

Equity in Tax Matters:
The Court emphasized the principle of equity in tax matters, stating that the delay in filing the writ petitions should not prevent considering them, especially when the respondents retained the petitioners' money. The Court held that interest should accompany the refund, as ordered by the Single Judge, to ensure fairness and justice in the resolution of the tax dispute. The Court's decision to award interest on the refund amount aimed to uphold the principles of equity and fairness in tax matters.