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TMI Blog2024 (10) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Petitioner Through: Mr. Ravi Chauhan Mr. Vasdev Lalwani, Advocates. For the Respondent Through: Mr. Rajeev Aggarwal, ASC with Mr. Prateek Badhwar, Ms. Shaguftha H. Badhwar Ms. Samridhi Vats, Advocates. JUDGMENT RAVINDER DUDEJA, J. 1. The present writ petition had been originally preferred seeking the issuance of a direction, commanding the respondent to sanction and issue refund of Rs. 94,71,440/- along with interests for the Assessment Year [ AY ] 2011-12 in terms of Section 38 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urth quarter amounting to Rs. 72,87,677/- has since been released. ANALYSIS AND CONCLUSION 11. As would be manifest from a consideration of Section 38 of DVAT Act, the claim for refund is to be considered in the light of plain language employed in that provision and principally Sub-Section (2) thereof which enables the commissioner to adjust any amount which becomes refundable against tax dues that may exist. Section 38 of the DVAT Act reads as follows: 38 Refunds (1) Subject to the other provisions of this section and the rules, the Commissioner shall refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. (2) Before making any refund, the Commissioner shall first apply such excess towards the recovery of any other amount due under this Act, or under the CST Act, 1956 (74 of 1956). (3) Subject to sub-section (4) and sub-section (5) of this section, any amount remaining after the application referred to in sub-section (2) of this section shall be at the election of the dealer, either (a) refunded to the person, (i) within one month after the date on which the return was furnished or claim for the refund was made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer to deny the amount of the corresponding tax credit claimed by such buyer, whether or not the seller refunds the amount to the buyer. (10) Where a registered dealer sells goods and the price charged for the goods is expressed not to include an amount of tax payable under this Act the amount may be refunded to the seller or may be applied by the seller under clause (b) of sub-section (3) of this section without the seller being required to refund an amount to the purchaser. (11) Notwithstanding anything contained to the contrary in sub-section (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act. 12. The subject of refund is also dealt by Rule 34 of the DVAT Rules, 2005 which is extracted herein below: Rule 34 (1) A claim for refund of tax, penalty or interest paid in excess of the amount due under the Act (except claimed in the return) shall be made in Form DVAT-21, stating fully and in detail the grounds upon which the claim is being made. (2) Only such claim shall be made in Form DVAT-21 that has not already been claimed in any previous return. A claim for refund made in Form DVAT-21 shall not be again included in the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or the CST Act. Sub-Section (3) of Section 38 of the DVAT Act requires that the amount remaining after adjustment under Sub-Section (2) of Section 38 of the DVAT Act be either refunded to the person in terms of Clause (a) of Sub-Section (3) or, at the option of the tax payer, be carried forward as tax credit to the next tax period in terms of Clause (b) of Sub-Section (3) of Section 38 of the DVAT Act. As per Rule 34 (1) of the DVAT Rules, the claim for refund of tax, penalty or interest paid in excess of the amount due under the DVAT Act is required to be made in Form DVAT-21 setting out the grounds for claiming such a refund. Sub Rule (2) of Rule 34 of the DVAT Rules expressly provides that a claim in Form DVAT-21 is required to be made only if it is not made in the previous return. Once Form DVAT-21 is submitted by the assessee, there is no additional obligation placed upon him. 14. If the assessee does not elect to carry forward the refund to the next period in terms of Clause (b) of Section 38 (3) of the DVAT Act, the refund is required to be processed within the period as specified in Clause (a) of Section 38 (3) of the DVAT Act. The obligation of amount of refund payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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. The said section is set out below: Section 42 relates to interest and sub-section (1) thereof stipulates that an assessee who is entitled to refund shall be entitled to receive, in addition to the refund, simple interest at the annual rate notified by the government from time to time computed on a daily basis. It fixes the time from which the interest is payable i.e. the date on which refund was due to be paid to the assessee; or the date when the overpaid amount was paid by that person, whichever was later. Interest is payable up to the date on which the refund is given. Subsection (1), therefore, fixes the starting point and the end point. With reference to the starting point, the date on which the refund was due to be paid to the assessee or the date when the overpaid amount was paid by the assessee, whichever i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 20. Respondent has collected, retained and enjoyed benefit of money of the petitioner for a long time without authority of law. Petitioner therefore automatically becomes entitled to interest under Section 42 of the DVAT Act. It is further made clear on a plain reading of Section 39 of the DVAT Act which provides as under: 39 Power to withhold refund in certain cases (1) Where a person is entitled to a refund and any proceeding under this Act, including an audit under section 58 of this Act, is pending against him, and the Commissioner is of the opinion that payment of such refund is likely to adversely affect the revenue and that it may not be possible to recover the amount later, the Commissioner may for reasons to be recorded in writing, either obtain a security equal to the amount to be refunded to the person or withhold the refund till such time the proceeding or the audit has been concluded. (2) Where a refund is withheld under sub-section (1) of this section, the person shall be entitled to interest as provided under sub-section (1) of section 42 of this Act if as a result of the appeal or further proceeding, or any other proceeding he becomes entitled to the refund. CONCL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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