Court rules interest on VAT refund starts from due date, not filing. Department ordered to pay; non-compliance incurs penalties.

The High Court held that interest on the refund under the Delhi Value Added Tax Act is payable from the due date of the refund, not the date of filing the return. The Court ordered the Respondent Department of Trade and Taxes to pay the differential interest to the Petitioner and compensate for the delay in payment. Failure to comply would result in additional compensation to the Petitioner. The judgment disposed of the petition in line with legal requirements, ensuring the payment of interest and compensation as mandated by law.

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Issues:
Interest payable by the Respondent Department of Trade and Taxes (DT&T) on the refund due to the Petitioner under Section 42 (1) (a) of the Delhi Value Added Tax Act, 2004.

Analysis:
The High Court addressed the issue of interest payable by the Respondent Department of Trade and Taxes (DT&T) to the Petitioner on the refund due under the Delhi Value Added Tax Act, 2004. The Petitioner filed a return for the 4th quarter of 2014-2015, claiming a refund of Rs. 27,88,29,335 on 20th May 2015. The DT&T issued the refund order on 27th May 2019, but calculated interest on the refund amount only from 3rd September 2016, not from the due date of the refund. The Court referred to the legal requirements and a previous judgment in IJM Corporation Berhad v. Commissioner of Trade and Taxes (2018) to clarify that interest is payable from the date when the refund was due to be paid, not from the date of filing the return. The Court emphasized that the starting point for payment of interest is when the refund becomes payable, as specified in the Act, and not the date of filing the return.

The Court held that the law was clear regarding the payment of interest on the refund amount and found no excuse for the Respondent's failure to pay interest from the due date. The Court ordered the differential interest to be credited to the Petitioner's account by a specified date, failing which the Respondent would have to pay additional compensation to the Petitioner. The judgment concluded by disposing of the petition in accordance with the terms outlined, ensuring the payment of interest and compensation as required by law.

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