Statutory interest on VAT refunds runs from the prescribed date, and a refund order cannot be unilaterally revised.

Statutory interest on a VAT refund runs from the date prescribed in section 38, namely the day after the close of the accounting year to which the refund relates, and not from the later date on which input tax credit was reversed. A transfer to the electronic credit ledger is treated as a memorandum entry and does not change the commencement of interest. Once the refund amount is fixed by appellate order, the assessing authority cannot unilaterally revise the refund payment order or reduce interest without using the revisional mechanism provided by the Act. The balance interest was therefore payable.

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Issues: (i) Whether interest on the refund was payable from 01.04.2017 or only from 18.12.2020 when the input tax credit was reversed; (ii) whether the assessing authority could revise the refund payment order on its own and reduce the interest component.

Issue (i): Whether interest on the refund was payable from 01.04.2017 or only from 18.12.2020 when the input tax credit was reversed.

Analysis: Section 38 of the Gujarat Value Added Tax Act, 2003 entitles a dealer to interest on refund from the date immediately following the close of the accounting year to which the refund relates until the date of payment. The refund arose from unutilised input tax credit that remained in the electronic credit ledger and was never used by the petitioner. The transfer to the electronic ledger was treated as a memorandum entry and did not alter the date from which statutory interest began to run. The appellate order determined the refundable amount, and interest was required to be computed on that refund from 01.04.2017.

Conclusion: Interest was payable from 01.04.2017 and the petitioner was entitled to the balance interest.

Issue (ii): Whether the assessing authority could revise the refund payment order on its own and reduce the interest component.

Analysis: The refund payment order had already been issued pursuant to the appellate order. The respondent altered the interest computation without initiating revisional proceedings under section 75 of the Gujarat Value Added Tax Act, 2003. Such unilateral self-revision was not permissible under the statutory scheme.

Conclusion: The self-revision of the refund payment order was impermissible and the reduced interest computation could not stand.

Final Conclusion: The petitioner succeeded to the extent of the unpaid interest, and the authorities were directed to release the balance amount within the stipulated time.

Ratio Decidendi: Where a refund becomes due under the VAT Act, statutory interest runs from the date prescribed in section 38, and the assessing authority cannot unilaterally revise a concluded refund payment order without following the revisional mechanism provided by the Act.

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