Delayed refund interest runs from the original refund claim when the later reduced claim relates back to it.

Interest was payable on the delayed refund because the later reduced refund request did not create a fresh claim; it related back to the original refund claim dated 26-6-2006 made pursuant to the appellate order. As the refund was sanctioned only in December 2008, after expiry of three months from the original claim, the delay was attributable to the department. The assessee therefore became entitled to interest for the period beginning three months after 26-6-2006 and continuing until actual payment.

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Issues: Whether the assessee was entitled to interest on the refunded amount from the expiry of three months after the original refund claim dated 26-6-2006, notwithstanding the later filing of a reduced refund claim in September 2008.

Analysis: The refund claim was not a fresh claim arising only in September 2008, but traced back to the claim made in June 2006 pursuant to the appellate order directing refund. Since the refund was sanctioned only in December 2008, beyond the statutory period of three months from the original claim, the delay in sanction was attributable to the department. In such circumstances, the assessee became eligible to interest for the period of delay after expiry of three months from 26-6-2006 till payment.

Conclusion: The assessee was entitled to interest on the delayed refund from the expiry of three months after 26-6-2006 till the date of payment.

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