B.K.S. Motors (P) LTD. vs. Commissioner Of Delhi Goods And Services Tax

Facts

The petitioner, B.K.S. Motors (P) Ltd., filed a writ petition seeking a refund of Rs. 10,91,642/- for the fourth quarter of 2016-17 and interest on that refund under Section 42(1) of the Act. The respondent, Commissioner of Delhi Goods and Services Tax, issued a refund order on May 11, 2022, approving a principal amount of Rs. 11,57,679/- and interest of Rs. 66,037/-. The petitioner had filed its return on May 2, 2017. The dispute arose over the calculation of interest, specifically the starting date. The respondent calculated interest from May 16, 2021, two months after the assessment order dated March 16, 2021, as per Section 42 of the Delhi Value Added Tax Act, 2004 (DVAT Act). The petitioner contended that interest should have run from two months after the return was furnished, as per Section 38(3)(a)(ii) read with Section 42 of the DVAT Act.

Held

The Court noted that the issue of interest calculation on refunds, particularly the starting date, was a subject matter of litigation before a coordinate bench in W.P.(C.) No.10701/2016, titled Vizien Organics vs Commissioner Trade and Taxes & Anr., which was decided on January 19, 2017. The respondent had appealed this judgment to the Supreme Court, which had stayed its operation on February 1, 2017, in SLP (Civil) No. 3496/2017. Following the methodology adopted in similar cases by other coordinate benches (W.P.(C.) No.13929/2018 and W.P.(C.) No.8290/2017), the Court disposed of the present writ petition. The Court directed that the petitioner's claim for the remaining interest would be processed and paid if the respondent/revenue were to ultimately fail in the aforementioned SLP (now Civil Appeal No.242/2018). The Court did not definitively rule on the interpretation of the DVAT Act provisions regarding interest calculation but deferred the final decision pending the outcome of the Supreme Court appeal.

Key Issues

1. Whether the interest on the refund is to be calculated from two months after the assessment order or two months after the return was furnished, under Section 42(1) read with Section 38(3)(a)(ii) of the DVAT Act? Petitioner's Contention: The petitioner argued that interest should be calculated from two months after the date the return was furnished, citing Section 38(3)(a)(ii) and the explanation to the second proviso of Section 42(1) of the DVAT Act. They contended that the revenue could only exclude periods of delay attributable to the assessee. Respondent's Contention: The respondent argued that interest calculation was triggered two months after the assessment order dated March 16, 2021, as per Section 42 of the DVAT Act. They also contended that the delay in furnishing C-Forms, as per Section 38(7)(d) of the DVAT Act, should be factored into the interest calculation.