Refund interest under tax law may be compensatory when statute is silent, but interest on interest is not allowed without express authority.

Where a taxing statute is silent on interest on refund, compensatory interest may be payable for wrongful deprivation of money due, but interest on interest is not permissible unless the statute expressly authorises it. The article notes that this distinction was applied by the Gujarat High Court by relying on an earlier coordinate Bench ruling and the Supreme Court's approach, and it declined to depart from that precedent. The assessee's claim for relief on the refund-interest issue was therefore not accepted, and the Tribunal's view on the covered question was left undisturbed.

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Issues: Whether the assessee was entitled to interest on refund under Section 54(1) of the Gujarat Sales Act, 1969 when the statute did not expressly bar such interest and the refund arose out of tax proceedings.

Analysis: The claim for interest on refund was examined in the light of the earlier coordinate Bench decision and the Supreme Court's distinction between interest on interest and compensatory interest. Where the taxing statute is silent on entitlement to interest on refund, interest may be awarded as a compensatory measure for wrongful deprivation of money due, but not as interest on interest. The Court found that the issue was already covered by the earlier decision and that no reason existed to depart from that view.

Conclusion: The assessee was not granted any relief in the present appeals on the challenge raised by the Revenue, and the claim to interfere with the Tribunal's view did not succeed.

Final Conclusion: The appeals failed because the Court applied the existing precedent on compensatory interest and declined to disturb the Tribunal's determination on the covered issue.

Ratio Decidendi: In tax matters, where the statute is silent, interest on refund may be awarded as compensatory relief for delayed repayment, but interest on interest is not permissible unless the statute expressly authorises it.

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