Provisional assessment refund and delayed refund interest were upheld after finalisation of assessment

Finalisation of provisional assessment entitled the assessee to refund, and the appellate authority's finding that the amount was refundable was upheld. The Tribunal also held that interest was payable on the delayed refund, including on the pre-deposit amount, because the refund became due only after finalisation and interest followed under the governing statutory scheme. The Revenue's objection that interest could not be granted for the relevant period was rejected. The departmental appeals therefore failed, and the orders granting refund and consequential interest were sustained.

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Issues: (i) Whether the assessee was entitled to refund of the amount arising out of finalisation of provisional assessment. (ii) Whether interest was payable on the delayed refund, including on the pre-deposit amount.

Issue (i): Whether the assessee was entitled to refund of the amount arising out of finalisation of provisional assessment.

Analysis: The refund claim arose from finalisation of provisional assessment. The lower appellate authority had examined the records and concluded that the amount was refundable. The Tribunal found no infirmity in that conclusion and accepted that the claim was within the framework applicable to provisional assessment.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether interest was payable on the delayed refund, including on the pre-deposit amount.

Analysis: The provisional assessment was finalised on 27.08.1998 and the refund claim was filed on 23.02.1999. The Tribunal held that the delayed refund was payable after finalisation and rejected the Revenue's contention that interest could not be granted for the relevant period. The Tribunal also upheld the view that interest followed on the delayed refund as ordered by the lower appellate authority.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The departmental appeals failed, and the orders granting refund and interest were sustained.

Ratio Decidendi: On finalisation of provisional assessment, refund and consequential interest are to be determined with reference to the date of finalisation and the governing statutory scheme, and a delayed refund cannot be denied interest merely because the underlying clearance period predates the interest provision when the refund itself became payable later.

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