VAT refund interest accrues after ninety days from the refund application; COVID limitation exclusions do not postpone payment.

The Jharkhand HC held that interest on a valid VAT refund accrues under the statutory framework after ninety days from the refund application, not from the later date when the Department processed the interest claim. Because the application was filed on 16.09.2020, the delay period for interest began on expiry of ninety days from that date. The Court also held that the COVID-19 limitation exclusions did not govern computation of interest on an admitted refund, as the issue concerned payment of money already due rather than institution of proceedings. The petitioner was therefore entitled to differential interest on the delayed refund at 9% per annum, after adjusting the amount already paid.

---

---

Issues: Whether the petitioner was entitled to interest on the delayed refund of VAT and, if so, at what rate and from which date the interest was payable.

Analysis: The refund claim was found to have been validly made under the VAT regime, and the statutory framework provided that refund interest would accrue after ninety days from the date of the refund application. The refund application was filed on 16.09.2020, so interest commenced after the expiry of ninety days and could not be shifted to the later date on which the Department processed the interest claim. The Court also held that the exclusion of time relating to the COVID-19 limitation orders did not apply to the computation of interest on a refund, since the matter concerned payment of money already due and not institution of proceedings. On the facts, the Court further accepted that the petitioner was entitled to enhanced compensation for the delayed use of the money and rejected the Department's reduced-calculation approach.

Conclusion: The petitioner was entitled to interest on the refunded amount for the period of delay, and the applicable rate was 9% per annum, with payment of the differential interest directed after deducting the amount already paid.

---