Court Orders Rs. 55.48 Crore Tax Refund with Interest Due to Unjust Delay in Processing Rectification Application.

The HC addressed the petitioner's grievances regarding the respondents' inaction on a rectification application and the non-granting of tax refunds. The court found the respondents' delay in processing the application and refund as unjust under the Income Tax Act, 1961. The court ordered the respondents to remit the refund of Rs. 55,48,66,713/-, including interest, within eight weeks. Additionally, the court acknowledged the successful migration of tax credits following the merger of Polaris Consulting & Services Limited and Virtusa Consulting Services Private Limited, resulting in a refund of Rs. 51.66 crores. The writ petition was disposed of, and pending applications were closed.

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Issues involved:
The issues involved in the judgment are related to the inaction of the respondents in disposing of a rectification application and granting refunds, the credit of pre-paid taxes of merged entities, and the timely release of refunds with interest.

Rectification Application and Refunds:
The petitioner filed a petition under Article 226 of the Constitution of India seeking relief for the inaction of the respondents in not disposing of the rectification application dated 28.01.2022 and not granting refunds, which was declared illegal, unjust, and against the provisions of the Income Tax Act, 1961. The petitioner also requested the respondents to grant credit of all pre-paid taxes of merged entities and to expeditiously dispose of the rectification application and grant the refund amount of Rs. 55,48,66,713/- (principal amount of Rs. 47,22,26,990/- with interest amount of Rs. 8,26,39,723/-) within a specified time frame. The court directed the respondents to remit the refund along with applicable interest to the petitioner within eight weeks from the date of the order.

Migration of Credit for Advance Tax and TDS:
The matter pertained to the migration of credit for advance tax and tax deducted at source (TDS) from Polaris Consulting & Services Limited to Virtusa Consulting Services Private Limited following their merger. Virtusa requested the revenue to allow credit of taxes paid by Polaris in the merged entity. The migration order from Polaris to Virtusa was successfully uploaded manually on 07.06.2023, allowing credit for advance tax and TDS and resulting in a refund of Rs. 51.66 crores. The court noted that since the migration issue was resolved, the consequential refund needed to be remitted to the petitioner promptly with applicable interest as per the law.

Conclusion:
The court, having found that the basic grievance of the petitioner had been redressed with the migration of credit and refund processing, directed the respondents to release the refund along with applicable interest to the petitioner within eight weeks from the date of the order. The writ petition was disposed of, and any pending miscellaneous applications were closed without any order as to costs.

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