Delayed VAT refund interest runs from the first refund application, and later applications do not cut down the entitlement.

Under the Punjab VAT regime, interest on delayed refund of excess input tax credit accrues when the refund is not issued within sixty days of the first refund application. Rule 52(10) required the refund voucher or adjustment order within that period, and section 40 made simple interest payable from the day after expiry of sixty days until refund. Later assessment proceedings and subsequent refund applications did not displace the entitlement arising from the original application for the credit already claimed.

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Issues: Whether interest on delayed refund of excess input tax credit was payable from the date of the first refund application, and not from a subsequent application, under the Punjab VAT regime.

Analysis: Rule 52(10) of the Punjab VAT Rules, 2005 requires issuance of the refund voucher or refund adjustment order within sixty days of the application for refund. Section 40 of the Punjab VAT Act, 2005 provides that where the refund is not made within sixty days from the date of application, simple interest becomes payable from the day immediately following expiry of that period until the date of refund. The fact that assessment proceedings were later initiated and the assessee made further applications relating to later assessment years did not take away the entitlement arising from the original refund application for excess input tax credit already claimed on 27.11.2020.

Conclusion: Interest was held payable from expiry of sixty days after the first refund application dated 27.11.2020 on the amount claimed therein, and not from the later application alone.

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