Consortium Of Sudhir Power Projects LTD. And Sudhir Gensets LTD vs. Commissioner Of Delhi Goods And Services Tax

Facts

The petitioner, Consortium of Sudhir Power Projects Ltd. and Sudhir Gensets Ltd., filed a writ petition seeking a refund of ₹59,56,772/- for the fourth quarter of 2013-14, along with interest. The petitioner had initially filed a return claiming a refund of ₹59,59,499/- on May 9, 2014, and later revised it to ₹59,56,772/- on January 15, 2015. The Value Added Tax Officer (VATO) issued a notice under Section 59(2) of the Delhi Value Added Tax Act, 2004 (DVAT Act) on October 19, 2015. A default assessment was framed on March 31, 2018, resulting in a demand of ₹34,582/- for the same period. The petitioner contended that even with this demand, a significant refund amount remained due and should not have been withheld. The respondent has since refunded the excess tax and paid interest for three years.

Held

The Court held that the petitioner is entitled to interest on the refund amount for the period prior to the three years for which interest has already been paid. The Court rejected the respondent's contention that the delay in filing the writ petition should disentitle the petitioner from claiming interest, finding the decision in Union of India v. Tarsem Singh inapplicable to the facts. The Court reasoned that there was no dispute regarding the petitioner's entitlement to the refund and that the return should be treated as an application for refund. Furthermore, the Court noted that delays in processing refund claims are endemic to the DVAT authorities. The Court also considered the Supreme Court's order in Suo Motu Writ Petition (Civil) No.3 of 2020 for the exclusion of a two-year period due to the COVID-19 pandemic. Ultimately, the Court directed the respondents to process the petitioner's claim for interest in accordance with law, with a consensus reached that interest would be payable from two months after January 15, 2015, until the date of refund. The Court also directed the Commissioner, Department of Trade and Taxes, to expedite the processing of all pending refund claims.

Key Issues

1. Whether the petitioner is entitled to interest on the refund amount for the period prior to the three years for which interest has already been paid, considering the delay in processing the refund claim? Petitioner's arguments: The petitioner argued that its return should be considered an application for refund and that interest is payable under Section 42 of the DVAT Act if the refund is not processed within two months of filing the return. They contended that there was no material on record to suggest the petitioner was responsible for any part of the delay. They relied on the explanation to Section 42 of the DVAT Act, which states that periods of delay attributable to the assessee are excluded from interest calculation. Respondent's arguments: The respondent argued that the petitioner's delay in filing the writ petition should be excluded for calculating the interest period, citing the Supreme Court's decision in Union of India v. Tarsem Singh regarding delay and laches in writ petitions.