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Issues: (i) Whether the assessee was entitled to interest on the delayed refund of the pre-deposit amount. (ii) Whether the assessee was entitled to interest on the interest amount.
Issue (i): Whether the assessee was entitled to interest on the delayed refund of the pre-deposit amount.
Analysis: The refund of the pre-deposit was made only after the expiry of three months from the date of the order allowing the appeal. Interest was therefore payable for the period commencing after the statutory grace period up to the date of actual refund.
Conclusion: The issue is answered in favour of the assessee. Interest on the pre-deposit refund is payable for the period from 4-11-2005 to 7-12-2006 at the applicable rate.
Issue (ii): Whether the assessee was entitled to interest on the interest amount.
Analysis: The claim for interest on interest was accepted in light of the governing Supreme Court decision relied upon in support of such relief.
Conclusion: The issue is answered in favour of the assessee. Interest on interest is allowed.
Final Conclusion: The assessee succeeds on both claims and is entitled to the consequential monetary reliefs arising from delayed refund.
Ratio Decidendi: Where refund of a pre-deposit is delayed beyond the period allowed after disposal of the appeal, interest is payable for the period of delay, and a claim for interest on interest may also be granted where supported by binding precedent.
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