Interest on VAT Refund-Karnataka

[CLARENCE PEREIRA]

My Sales Tax assessment for YE 31.03.2001 was concluded. However by SMR (Summary Revision) Order in 2006 there was an additional demand of ₹ 4.00 Lacs. This was paid under protest and an appeal was filed. This was disposed by the Tribunal in my favour in 2011. Thereafter I filed for refund. I received the refund in September 2014. I want to know if i am entitled to interest in as much as the Department collects interest for delay. Here i have paid excess on their demand which was quashed by the tribunal. please advise.

[YAGAY and SUN]

Dear Clarence,

Please check Section 50 the Karnataka VAT Act read with Rules made there under regarding interest on refund.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

[CLARENCE PEREIRA]

Thank You very much.

Is the interest applicable from date of payment under protest and at what rate?

[YAGAY and SUN]

Dear Clarence,

Section 50. Payment of interest on refunds.- (1) Where any amount refundable to any person under an order made, or proceedings taken, under any provision of this Act or Rules made thereunder is not refunded to him within thirty five days, (a) of the date of such order, if that order is made by the refunding authority, or (b) of the date of receipt of such order by the refunding authority, if that order is made by an authority other than the refunding authority, the refunding authority, being any officer of the Commercial Taxes Department authorized to make any refund under this Act, shall pay such person simple interest at the rate of ^{1[Six percent] per annum on the said amount from the day immediately following the expiry of the said thirty five days to the day of the refu}1. Substituted by Act 6 of 2005 w.e.f. 19.3.2005.

(2) The interest calculable under sub-section (1) shall be on the balance of the amount remaining after adjusting out of the refundable amount any tax, interest or other amount due under this Act, for any year by the person on the date from which such interest is calculable.

(3) In computing the period of thirty five days referred to in sub-section (1), such periods as may be prescribed shall be excluded.

(4) The interest payable for a part of month shall be proportionately determined.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

[CLARENCE PEREIRA]

Thanks. Will see if they give any interest !!!

AI Summary

Interest on VAT refunds payable when refunds delayed beyond prescribed period; rate and calculation set by statute.
Section 50 mandates simple interest on refundable amounts not paid within thirty-five days of the relevant order or its receipt by the refunding authority; interest accrues from the day after that period until refund at the statutory rate of six percent per annum on the balance remaining after adjusting any tax, interest or other amounts due, with prescribed exclusions for computing the thirty-five days and proportional determination for part months.