2022 (12) TMI 461 - HC - VAT and Sales Tax

Grant of refund - refund at the statutory rate from the date when SOHA had allowed the objections, i.e., 17.07.2018 - HELD THAT - The interest should be granted to the petitioner on the refunded amount from the date when SOHA passed the order i.e., 17.07.2018, which is also the prayer made by Mr Bhatia on behalf of the petitioner. The reason being that although the rectification order was passed on 07.09.2021 with regard to the typographical error which had crept in the order of the SOHA dated 08.07.2017 concerning the value of the C-Forms, the conclusion remained undisturbed, i.e., the demand continued to be shown as nil - there is no dispute that the petitioner had presented, at the relevant point in time, i.e., before the order was passed by the SOHA on 08.07.2017, C-Forms worth Rs. Rs.3,42,20,991/-, as recorded in the order dated 07.09.2021. Interest in this case, is accorded to the assessee based on the principle that it represents the value concerning money that the assessee could not make use of. The money which was due to the petitioner remained with the respondent/revenue, and therefore, the petitioner was entitled to be compensated. The compensation mechanism is provided in the DVAT Act. Besides this, if we were to accept the stand taken by Mr. Vashisht, it would amount to allowing the respondent/revenue to take advantage of the wrong committed by it. It was for the respondent/revenue to have the error corrected. The interest at the statutory rate, i.e., 6% per annum will be paid to the petitioner for the period commencing from 17.07.2017 till the date of payment of the principal amount, which, we are told is 10.09.2021 - petition disposed off.

Summary

Issues:
Refund of principal amount and interest component due to the petitioner.

Analysis:
The petitioner sought a writ of mandamus directing the respondents to refund the principal amount and interest due. The respondent had refunded the principal amount during the pendency of the petition, leaving only the interest outstanding. The petitioner filed returns for two periods, claiming refunds. Demands were created by the revenue, and after objections, the demands were reduced to nil. Refund applications were filed subsequently. The respondent did not defend why interest should not be granted. The petitioner sought interest from the date objections were allowed. An error in the order for the second period was rectified, but the demand remained nil. The petitioner presented C-Forms worth a significant amount before the original order. Interest was sought based on the principle of compensation for the money the petitioner could not use. The court held that interest should be paid at the statutory rate from the date of filing refund applications until the payment of the principal amount for both periods.

The court found no defense for denying interest to the petitioner for the first period, ordering interest at the statutory rate from the date objections were allowed till the payment of the principal amount. For the second period, the court disagreed with the revenue's stance, stating interest should run from the date of the refund application, considering the significant amount of C-Forms presented by the petitioner. The court emphasized that interest compensates for the money the petitioner could not utilize and corrected the error in the rectification order date. Interest at the statutory rate was awarded for both periods until the payment of the principal amount. The judgment disposed of the writ petition accordingly.