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2024 (10) TMI 798 - HC - VAT / Sales TaxSeeking refund alongwith interest in terms of Section 38 and 42 of the Delhi Value Added Tax Act, 2004 - non-furnishing of declaration forms - compliance with timelines or not - HELD THAT - Admittedly, the refund was not released within the stipulated period of two months from the date of submitting the Form DVAT 2 in terms of Section 38 (3) (a) (ii) of the DVAT Act. The State having received the money without rights and having retained and used it, is bound to make the party good, just as an individual would be under the circumstances. The obligation to refund the money received and retained without right implies and carries with it the right to interest. Interest is the return or compensation for use or retention of another s money. Section 42 of the DVAT Act deals with payment of interest. There is no material on record to indicate that the petitioner was in any manner responsible for delay in processing of the refund. There is not even any such allegation in the counter affidavit filed by the respondent. In terms of statutory time frame which stands constructed by Section 38 (3) (a) (ii) of DVAT Act, the refund had become payable on 26.12.2021. It is a clear case of illegal retention of money of the petitioner. The petitioner cannot be denied interest on the amount of interest withheld unjustifiably. The petitioner is entitled for interest on refund. Admittedly, statutory rate of interest is 6% by virtue of notification dated 30.11.2005. Petitioner shall be therefore entitled to simple interest @ 6% per annum from the date it became due - Petition allowed.
Issues Involved:
1. Entitlement to refund under the Delhi Value Added Tax Act, 2004 (DVAT Act) for AY 2011-12. 2. Entitlement to interest on delayed refund under Section 42 of the DVAT Act. 3. Compliance with statutory provisions and timelines for processing refunds under Section 38 of the DVAT Act. 4. Application of legal principles regarding the retention of excess payments and the obligation to pay interest. Issue-wise Detailed Analysis: 1. Entitlement to Refund: The petitioner, a manufacturer of motor vehicles, sought a refund of Rs. 94,71,440/- for AY 2011-12 under the DVAT Act. Initially, the assessment under the CST Act for the same year resulted in a demand due to non-furnishing of declaration forms. However, upon filing objections, the demand was reduced, resulting in an excess payment. The petitioner filed applications in Form DVAT-21 for a refund, which was not initially processed, leading to the filing of the writ petition. During the pendency of the petition, refunds for the first three quarters were sanctioned, and eventually, the refund for the fourth quarter was also sanctioned. 2. Entitlement to Interest on Delayed Refund: The petitioner argued entitlement to interest on the delayed refund under Section 42 of the DVAT Act. The court noted that Section 42 provides for simple interest on refunds due, computed from the date the refund was due or the date of overpayment, whichever is later. The court emphasized that the obligation to refund carries with it the right to interest, as it compensates for the use or retention of another's money. 3. Compliance with Statutory Provisions and Timelines: The court highlighted the mandatory nature of the timelines under Section 38 of the DVAT Act for processing refunds. The petitioner had submitted Form DVAT-21 on 26.10.2021, and the refund was not processed within the stipulated two-month period. The court reiterated that the DVAT Act mandates strict adherence to these timelines, as underscored by previous judgments. The court found no evidence that the petitioner was responsible for any delay in processing the refund. 4. Legal Principles on Retention of Excess Payments: The court observed that the state had retained the petitioner's money without right and used it, thereby obligating it to pay interest. The court cited precedents emphasizing that public bodies must return erroneously collected money and that the obligation to refund includes the right to interest. The court rejected any notion of denying interest due to the absence of an alternative remedy, aligning with the principle of ubi jus ibi remedium (where there is a right, there is a remedy). Conclusion: The court concluded that the petitioner was entitled to interest on the refund at a statutory rate of 6% per annum from the date it became due, as per the notification dated 30.11.2005. The court directed compliance within four weeks of the judgment date, allowing the writ petition in favor of the petitioner.
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