Tax deferment schemes: interest on refunded deferred tax is payable only if the statute or scheme expressly provides for it.

Interest on refunded tax under a deferment scheme was denied because such interest can arise only from an express statutory provision or agreement. The SC distinguished a refund claim under regular assessment from repayment of deferred tax retained temporarily under a sales tax deferment arrangement, and held that equity cannot supply interest where the scheme and governing rules are silent. The refund remained payable, but only without interest, and the direction awarding interest was set aside.

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Issues: Whether interest was payable on the amount refunded under the tax deferment scheme.

Analysis: Interest in a tax matter can arise only from an agreement or an express statutory provision. The deferment scheme and the rules framed under the sales tax law governed the assessee's entitlement, but they contained no provision for payment of interest on the deferred amount. The refund claim under Section 12 of the Punjab General Sales Tax Act, 1948 concerned regular assessment and excess tax, whereas the present dispute arose under a deferment arrangement in which tax collected was retained temporarily and later repayable. In such a statutory scheme, equity cannot be invoked to award interest, and exemption or deferment provisions must be construed strictly.

Conclusion: Interest was not payable on the refunded amount; the assessee was entitled only to refund without interest.

Final Conclusion: The appeal succeeded to the extent that the direction granting interest was set aside, while the refund itself was maintained.

Ratio Decidendi: In a tax deferment scheme, interest can be awarded only if the scheme or the governing statute expressly provides for it or the parties have agreed to it; absent such provision, no interest is payable on the deferred tax amount.

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