Interest on excess tax refunds includes unpaid interest where the Revenue unjustifiably withheld legally due interest.

Interest is payable on excess tax paid where the Revenue has unjustifiably withheld interest that was legally due, and that liability extends to interest on the unpaid interest amount. The Tribunal and High Court applied binding Gujarat High Court authority recognising this principle, and the Revenue did not dispute the correctness of those decisions. The question was answered in the affirmative in favour of the assessee.

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Issues: Whether interest is payable on the amount of interest due on excess tax paid, where the Revenue had unjustifiably failed to pay the interest that was legally due.

Analysis: The Tribunal and the High Court had proceeded on the basis that the Revenue was liable to pay interest on excess amounts paid towards income tax, and that this liability extended to interest which ought to have been paid but was not paid without justification. The Revenue did not challenge the correctness of the Gujarat High Court decisions supporting this principle, and those decisions were treated as binding.

Conclusion: The question was rightly answered in the affirmative and in favour of the assessee.

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