VAT deferment and statutory interest: refund is barred absent proof that the tax burden was not passed on.

The transition from exemption under the Bihar Finance Act, 1981 to the Bihar Value Added Tax Act, 2005 replaced the earlier regime with a limited deferment option under Section 96(3)(b), to be exercised through the prescribed Form A-XII procedure under Rule 57. If deferment was not duly opted for, delayed tax or deferred tax attracted statutory interest. The article further notes that a refund of such interest is unavailable unless the claimant shows the burden was not passed on, because otherwise restitution would amount to unjust enrichment. On those principles, waiver or refund of the interest claim was rejected.

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Issues: Whether the petitioner was entitled to waiver or refund of interest collected on delayed payment of VAT after the coming into force of the Bihar Value Added Tax Act, 2005, in the light of the transitory provisions, the deferment scheme, and the bar of unjust enrichment.

Analysis: The petitioner had enjoyed exemption under the Bihar Finance Act, 1981, but upon commencement of the Bihar Value Added Tax Act, 2005, the exemption regime ceased and the statute enabled only a limited option of deferment under Section 96(3)(b), to be exercised in the manner prescribed by Rule 57 of the Bihar Value Added Tax Rules, 2005. The prescribed procedure required an application in Form A-XII, and default in payment of tax or deferred tax attracted statutory interest. The petitioner did not timely opt for deferment and, in any event, the liability to pay tax or interest remained statutory. The Court further held that the interest paid formed part of a tax burden presumed to have been passed on to consumers, and absent any showing to the contrary, refund would result in unjust enrichment.

Conclusion: The claim for waiver or refund of interest was rejected and the petitioner failed on the issue.

Final Conclusion: The statutory regime governing VAT and deferment did not confer immunity from interest, and refund was barred on the facts by the principle against unjust enrichment.

Ratio Decidendi: Where tax or deferred tax carries statutory interest under the governing enactment, refund of that interest is not available unless the claimant shows that the burden was not passed on, because otherwise restitution would amount to unjust enrichment.

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