Interest on delayed refund under Section 11BB starts after three months, not from refund order date

SC upheld the view that for interest payable on delayed refund under Section 11BB, the liability to pay interest commences on the expiry of three months from the date of commencement of Section 11BB, irrespective of when the competent authority ultimately decides whether the amount is to be credited to the Welfare Fund or refunded to the applicant. The relevant date is not linked to the date of the refund order but to the statutory three-month period. Finding no error in the reasoning of the Rajasthan HC, SC declined to interfere and dismissed the SLP.

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Issues: Whether the relevant date for determining liability to pay interest under Section 11BB (and with reference to Section 11B) is the date of the application claiming refund or the date of the authority's determination.

Analysis: The Court examined the interpretation of Section 11BB (with reference to Section 11B) concerning payment of interest on belated refunds. The analysis follows the principle that the starting point for liability to pay interest is driven by the claimant's date of application for refund or, where the proviso applies, the date of commencement of Section 11BB. The three-month non-payment period from the date of such application (or commencement as governed by the proviso) triggers the obligation to pay interest, and this temporal benchmark is not the date of the subsequent determination by the competent authority regarding transfer to the Consumer Welfare Fund or payment to the claimant.

Conclusion: Held that for the purpose of Sections 11BB and 11B, the relevant date for determining liability to pay interest on belated refunds is the date of the application claiming refund (or, where applicable, the date of commencement of Section 11BB). This conclusion is favourable to claimants seeking interest measured from the application date.

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