Mandatory interest on delayed VAT refunds applies from the statutory due date until actual payment

Section 50 of the Karnataka Value Added Tax Act was treated as mandatory, requiring simple interest at 6% per annum on delayed refund amounts. The assessing authority had no discretion to refuse interest because of administrative workload or other departmental reasons. Interest was held to run from the day after expiry of thirty-five days from the appellate order until actual payment. The assessee's claim for interest on the refunded tax amount therefore succeeded.

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Issues: Whether interest was payable on the refund amount under Section 50 of the Karnataka Value Added Tax Act, 2003 despite the Department's failure to compute or disburse it promptly.

Analysis: The provision was held to be mandatory and to require payment of simple interest at 6% per annum on the refund due to the assessee. The Court held that no discretion was available to the assessing authority to withhold interest on the ground of administrative workload or other departmental reasons, and that interest ran from the day after the expiry of thirty-five days from the appellate order until actual payment.

Conclusion: Interest on the refunded tax amount was payable to the assessee in accordance with Section 50, and the claim for interest succeeded.

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