Facts of the case:
- A registered dealer under the Delhi Value Added Tax Act, 2004 (DVAT Act), filed a return claiming a refund on 10th July, 2015 amounting to Rs. 2,56,57,120.
- The tax period for which refund was claimed was the fourth quarter of 2014.
- However, after set off/adjustments the net amount of refund came out to Rs.1,30,96,335.
On account of the failure to pay interest for the period between 11th September, 2015 (i.e. expiry of two months after filing of the refund application) and 14th September, 2017, the date when the refund amount was received by it.
Now, the petition was filed requesting to grant refund along with interest. However, such request was rejected by the department.
Provisions and Interpretations of Law:
- The court highlighted the section 42(1) of the DVAT Act, “It talks of the two dates i.e. date the refund was due to be paid to the person” and “until the date‟ on which the refund is ‘given’.
- However, the word ‘given’ shall be interpreted as the date on which the refund amount is actually received and not the date simply on which the refund orders is issued.
- In the present case, Respondent has not disputed the fact that the refund amount was in fact received by the Petitioner only on 14th September, 2017.
- Hence, it is held that the Petitioner is entitled to interest on the refund amount issued by the order dated 25th August, 2017 for the period from 11th September, 2015 till 14th September, 2017.
- The interest shall be credited to petitioner till 16th August, 2019 as per the amount calculated by considering Section 42 read with Rule 34 and 36 of the DVAT Rules.
- Further added that if the petitioner didn’t get refund upto 16th August, the same be entitled for compensation of Rs. 50,000.
Conclusion: An ordered has been issued by two-judge bench of the Delhi High Court has to the Delhi VAT department to pay Rs. 50,000 as compensation if the department delayed the DVAT refund amount with interest within the due date prescribed by the Court i.e. 16th August, 2019.