Delayed refund interest applies when non-MICR payment failure is beyond the taxpayer's control.

Interest was payable on a delayed sales tax refund where the refund payment order could not be encashed because it was a non-MICR instrument and the delay was not attributable to the applicant. Repeated attempts to realise the refund failed due to treasury and banking objections after the clearing system changed, and revalidation of the same instrument was not an effective solution. The authorities were under a duty to ensure actual payment of the sanctioned refund, and section 10B of the Bengal Finance (Sales Tax) Act, 1941 provided the basis for statutory interest. The applicant was therefore entitled to interest for the period of wrongful delay.

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Issues: Whether the applicant was entitled to interest on delayed refund of tax money where the original refund payment order could not be encashed because it was a non-MICR instrument and the delay was not attributable to the applicant.

Analysis: The refund of Rs. 10,000 had been sanctioned long earlier, but the refund payment order repeatedly failed to be encashed because of objections raised by the treasury and the bank after the introduction of the computerised clearing system. The applicant had made repeated efforts to secure payment, and the delay was found to have occurred for reasons beyond his control. Revalidation of the same non-MICR instrument was held to be no effective solution, and the authorities were under a duty to ensure actual payment of the refund. The statutory basis for interest was found in section 10B of the Bengal Finance (Sales Tax) Act, 1941.

Conclusion: The applicant was entitled to interest for delayed refund, and the respondents were directed to pay Rs. 12,000 as interest on the refunded sum of Rs. 10,000.

Final Conclusion: The application was allowed to the extent of granting statutory interest for the period of wrongful delay in refund, and the refund direction was made absolute.

Ratio Decidendi: Where refund is wrongfully delayed for reasons attributable to the department and the refund order cannot be effectively realised due to procedural or banking constraints, the assessee is entitled to interest under the governing sales tax statute.

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