2024 (4) TMI 857 - HC - VAT and Sales Tax

Interest on delayed refund - relevant time for calculation of interest - HELD THAT - Reference may be had to Article 25 of the Schedule to the Limitation Act, which stipulates that the period of limitation for money payable for interest upon money due from defendant to the plaintiff is 3 years and the time from which the period begins is when the interests become due. In terms of Section 30 (4) of Delhi Sales Tax Act, 1975, interest becomes due and payable on delayed refund on expiry of 90 days from the date of making the claim under Sub-Section 3. Accordingly, the period of limitation for claiming interests on the delayed payment would be three years from the expiry of 90 days. Since the refund was delayed, for every passing month the interest accrued @1.5% per month. Accordingly, with every passing month with effect from the commencement of the period of limitation, interest for the preceding one month in the block of three years would extinguish and interest for succeeding one month would accrue. Petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. Since the delay is beyond the period of one month as provided under Section 30 (4), the rate of interest applicable would be 1.5% per month - this petition is disposed off.

Summary

Issues involved:
The issue involves a petition seeking a refund with interest, as per the provisions of Section 30 of the Delhi Sales Tax Act, 1975.

Details of the Judgment:

Issue 1: Refund Claim and Interest Due
The petitioner sought a refund of Rs. 20,18,729/- under Section 16 of the Act. The assessment order for the refund was passed in 2006. The petitioner made a claim for refund within the prescribed time frame, but the refund was delayed without any interest being paid. The main issue was the interest to be paid on the delayed refund.

Issue 2: Applicability of Interest Rate
Section 30(4) of the Act stipulates that if a refund is not made within 90 days of the claim, the person is entitled to interest. The petitioner argued that since the claim was made within the specified time and there was an unexplained delay in the refund, interest should be paid as per the Act.

Issue 3: Calculation of Interest
The court considered the period for claiming interest on the delayed payment to be three years from the expiry of 90 days from the claim. The interest rate applicable was determined to be 1.5% per month. The court held that the petitioner was entitled to interest for the three years preceding the filing of the petition until the refund was disbursed.

Conclusion:
The court disposed of the petition by directing the respondents to pay interest at the rate of 1.5% per month on the refund amount for the three years preceding the filing of the petition until the date of refund disbursal. The respondents were ordered to pay the interest within four weeks from the date of the judgment.