Delay in tax refund payments and interest attributed to officials; respondents directed to file affidavit and fix accountability

HC held that delays in refund payments and attendant interest are attributable to departmental officials and impose an unwarranted burden on the public exchequer while prejudicing claimants. The court directed respondents to file an affidavit, after taking instructions from the CBDT, setting out procedures to prevent such interest liabilities, and to explain whether rules exist or need framing and how officer accountability will be fixed. Respondents were ordered to take instructions and state the total interest payable to the petitioner so appropriate orders can be passed.

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Issues:
1. Delay in refund of tax by the Respondent-department.
2. Concerns regarding interest burden on the Government of India.
3. Petitioner's claim for refund for Assessment Years 2016-17 and 2013-14.
4. Prayers sought by the petitioner in the petition.
5. Response by the Revenue through an affidavit.
6. Refund granted to the petitioner after court orders.
7. Outstanding interest amount due to the petitioner.
8. Lack of internal controls and checks in the income tax department.
9. Concerns of the Court regarding interest payments and public exchequer burden.
10. Directions to respondent Nos. 5 and 6 to provide an affidavit.
11. Need for rules and accountability in refund processes.
12. Hearing on the affidavits directed to be filed.
13. Impact of delayed refunds on the public exchequer and assessees.
14. Pending interest amount to be addressed by the Revenue.
15. Next hearing date set by the Court.

Analysis:

The High Court judgment addressed a petition under Article 226 concerning the delay in refunding tax to the petitioner by the Respondent-department. The Court expressed serious concerns about the laxity leading to such delays, highlighting the unwarranted interest burden on the Government of India due to negligence. The petitioner sought refunds for Assessment Years 2016-17 and 2013-14, claiming a substantial amount of Rs. 77,64,71,629 was not granted. The petitioner requested a Writ of Certiorari to quash the adjustments and a Writ of Mandamus to prompt the refund with applicable interest. The Revenue responded through an affidavit, acknowledging mistakes and leading to further court orders for appropriate steps.

Following the court orders, the petitioner was granted a refund of the claimed amount. However, an outstanding interest of Rs. 3,10,58,865 remained unpaid. The Court raised concerns about the lack of internal controls in the income tax department, leading to unwarranted interest burdens on the Government. It directed respondent Nos. 5 and 6 to provide an affidavit on procedures to avoid such burdens. The Court emphasized the need for rules, accountability, and mechanisms to prevent delays in refunds and interest payments.

The judgment highlighted the broader public interest in avoiding unjust enrichment and ensuring timely refunds to prevent prejudice to both the revenue and the assessees. The Court scheduled a hearing on the affidavits to be filed, considering the impact of delayed refunds on public funds and assessees. The Revenue was instructed to address the pending interest amount promptly to enable appropriate orders. The next hearing was set for further proceedings on the matter.

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