Mandatory refund procedure and delayed repayment justify interest on refundable tax amounts despite no express interest clause.

Mandatory refund procedure under the West Bengal Sales Tax Rules required a Refund Adjustment Order to accompany the demand notice, and non-compliance with that procedure was treated as unjustified. Because the applicant was kept out of money that should have been refunded in time, the absence of an express interest clause did not prevent compensation for delay; interest was payable on the refundable amount from the date of the demand notice until payment. The refund direction was therefore modified to include interest at 1% per month for the relevant period.

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Issues: Whether the applicant was entitled to interest on the refundable amount for delay in refund and whether the refund ought to have been processed in accordance with the prescribed statutory procedure.

Analysis: The amended proviso to sub-rule (4) of rule 181 of the West Bengal Sales Tax Rules, 1995 required a Refund Adjustment Order to be sent along with the demand notice. The deviation from that mandatory procedure was held to be unjustified, and the respondents were not permitted to rely on the absence of an express interest provision to deny compensation for the delay caused by non-compliance with the prescribed refund process. Since the applicant was kept out of the money that should have been refunded in time, interest was held to be payable on the refundable amount from the date of the demand notice until payment.

Conclusion: The applicant was held entitled to interest at 1% per month on the refundable amount for the relevant period, and the direction for payment of the refund amount within four weeks was modified accordingly.

Final Conclusion: The decision grants monetary relief to the applicant by recognising a right to interest on delayed refund where the statutory refund procedure was not followed.

Ratio Decidendi: Where the prescribed refund procedure is mandatory and delay in refund results from non-compliance with that procedure, the revenue cannot deny interest merely because the statute does not expressly provide for interest in that situation.

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