Facts of the Case

  • The petitioner was granted a final certificate (Form-5) under the VSV Act on 05 April 2021, determining refund amounts for AY 2010-11 and 2011-12.
  • Despite determination, the refund was delayed and paid only during the pendency of proceedings.
  • The petitioner approached the Delhi High Court seeking:
    • Release of refund
    • Interest @ 9% per annum for delay

Issues Involved

  1. Whether interest is payable on delayed refund under the Direct Tax Vivad Se Vishwas Act, 2020?
  2. Whether administrative/technical delays can justify non-payment of interest?
  3. Whether refund once determined becomes a debt owed by the Revenue?

 

Petitioner’s Arguments

  • Interest is compensation for wrongful retention of money by the State.
  • Relied on Union of India vs Tata Chemicals Ltd., where it was held:
    • Money retained without authority must be returned with interest.
  • Delay was attributable to the department and not the petitioner.

Respondent’s Arguments

  • No provision under VSV Act for payment of interest on refunds.
  • Delay caused due to:
    • Existence of two PAN numbers of deceased assessee
    • Requirement of No Objection Affidavit from legal heirs
    • Technical issues at CPC (Central Processing Centre)

Court’s Findings / Order

  • Refund due is a debt owed by the Revenue.
  • No provision in VSV Act prohibits payment of interest.
  • Administrative or technical reasons cannot justify withholding refund or interest.
  • Reliance placed on Tata Chemicals Ltd.:
    • State must compensate for unauthorized retention of money.

Final Order

  • Petitioner held entitled to interest on delayed refund.
  • Interest awarded:
    • 5% per annum (simple interest)
    • From 05 July 2021 (after 90 days from determination)
    • Till 11 February 2022 (date of payment)

Important Clarifications by Court

  • VSV Act does not override general principles of equity and restitution.
  • Delay due to:
    • PAN duplication
    • CPC technical issues
    • Internal processing
      cannot benefit the Revenue.
  • Refund once determined must be paid within reasonable time (90 days).

 

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3356-DB/MMH23082022CW19852022_191624.pdf

Disclaimer

strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.