Refund interest starts from settlement date when later withholding lacks authority of law.

Interest on a refund sanctioned under Rule 173L was payable from the date the refund claim was first settled, because the amount became due on that date and later withholding through further proceedings and objections was without authority of law. Administrative delay in processing could not deprive the assessee of interest for the intervening period, so the original authority had to compute interest from the date of settlement of the refund claim.

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Issues: Whether interest on the refund sanctioned under Rule 173L was payable from the date the refund claim was first settled, despite the later processing and rejection of objections by the lower authority.

Analysis: The refund had been settled in favour of the assessee, and the subsequent withholding of the amount through further proceedings and objections was found to be without authority of law. Once the refund became due on the date it was settled, later administrative handling could not deprive the assessee of interest for the period of delay. The original authority was therefore required to compute interest from the date of settlement of the refund claim.

Conclusion: The issue was decided in favour of the assessee, and interest was held payable from the date on which the refund was settled.

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