Delayed refund interest under Bihar tax law is mandatory after six months, with strict enforcement of TDS deposit rules.

A refund delayed beyond the statutory six-month period carries mandatory interest under section 43 of the Bihar Finance Act, 1981, and verification delays in treasury deposits do not defeat that entitlement. The applicable rate was 9% per annum from the expiry of six months after the refund application until actual payment. The text also stresses that rule 26A(3)(i) of the Bihar Sales Tax Rules, 1983 must be strictly followed and that authorities should initiate action under section 25A(6) against deductors who fail to deposit tax deducted at source in the prescribed manner, to avoid unnecessary refund delays and interest liability.

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Issues: (i) Whether the petitioner was entitled to interest on the delayed refund under section 43 of the Bihar Finance Act, 1981. (ii) Whether the State and departmental authorities were required to strictly implement rule 26A(3)(i) of the Bihar Sales Tax Rules, 1983 and take action under section 25A(6) of the Bihar Finance Act, 1981 against non-compliant deductors.

Issue (i): Whether the petitioner was entitled to interest on the delayed refund under section 43 of the Bihar Finance Act, 1981.

Analysis: The refund application had remained unpaid beyond six months, and the statutory scheme made interest payable once that period expired. The delay in verification of treasury deposits was not accepted as a justification to defeat the statutory entitlement to interest.

Conclusion: The petitioner was entitled to interest at 9% per annum on the refunded amount from the expiry of six months after the refund application until the date of actual refund.

Issue (ii): Whether the State and departmental authorities were required to strictly implement rule 26A(3)(i) of the Bihar Sales Tax Rules, 1983 and take action under section 25A(6) of the Bihar Finance Act, 1981 against non-compliant deductors.

Analysis: The Court found that non-compliance with the prescribed treasury challan procedure contributed to delay in refund and avoidable liability for interest. It emphasised that the treasury and commercial taxes authorities were obliged to ensure strict adherence to the deposit mechanism and to initiate penal proceedings where tax deducted at source was not deposited in accordance with the rules.

Conclusion: The authorities were directed to strictly enforce rule 26A and to take appropriate action under section 25A(6) against persons failing to deposit deducted tax in compliance with the rules.

Final Conclusion: The writ petition succeeded to the extent of granting interest on the delayed refund and issuing administrative directions to secure compliance with the statutory refund and deposit framework.

Ratio Decidendi: Where a refund becomes statutorily due after the prescribed period, administrative delay in verification cannot defeat the mandatory right to interest, and the revenue authorities must enforce deposit procedures strictly to prevent avoidable refund liability.

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