Payment of interest on VSV Act refund ordered at 6% p.a. from beyond 90 days until actual payment

Determination under the Vivad Se Vishwas Act produced a refundable amount by issuance of Form No.5; the Explanation addressing pre-declaration payments does not bar entitlement to interest for delay after Form No.5. The respondents refunded/adjusted the amount months later without adequate justification; therefore the affected party is entitled to interest for delay beyond a 90day period from the determination date. Interest is directed at 6% per annum from the day after the 90day period until actual payment, with interest calculated on outstanding balances for each partial payment date. Reliance on restitution principles supports awarding interest for unjust retention.

---

---

Issues Involved:
The petitioner seeks direction for payment of interest on the refund amount due against the respondents. The main issue is whether the petitioner is entitled to interest on the delayed refund amount as per the provisions of the Income Tax Act and the Vivad Se Vishwas Act, 2020.

Summary:

Issue 1: Entitlement to Interest on Refund Amount
The petitioner filed an application under the Vivad Se Vishwas Act, 2020 for settlement of disputes and was granted a refund of Rs.3,47,03,505. Despite receiving the refund through adjustments against demands, no interest was paid for the delayed payment. The petitioner contends that they are entitled to interest on the amount as per Section 244A (1) of the Income Tax Act, 1961.

Issue 2: Applicability of Legal Precedents
The petitioner relies on the judgments in Anjul vs. PCIT by the Delhi High Court and UPS Freight Services India Pvt. Ltd. Vs. Deputy Commissioner of Income Act by the Bombay High Court, which ordered payment of interest in similar circumstances.

Issue 3: Interpretation of VSV Act Provisions
The respondents argue that the Explanation to Section 7 of the Vivad Se Vishwas Act, 2020 prohibits the grant of any interest on refunds. However, the court notes that this provision pertains to amounts paid before filing a declaration under the Act and does not address entitlement to interest post-refund determination.

Judgment:
The court observes that the petitioner became entitled to the refund amount upon the issuance of Form No. 5 under the VSV Act on 8/3/2021. Despite delays in refunding the amount, no valid reasons were provided. Citing legal precedents, the court affirms the petitioner's entitlement to interest on the delayed refund amount. Consequently, the writ petition is allowed, directing the respondents to pay interest at the rate of 6% per annum on the delayed refund amount from 8/6/2021 until the date of actual payment, to be calculated and paid within 08 weeks from the date of the order.

---