Femc-Pratibha Joint Venture vs. Commissioner Of Trade & Taxes

Facts

The Petitioner, FEMC-PRATIBHA JOINT VENTURE, filed a return for the 4th quarter of 2014-2015 on May 20, 2015, claiming a refund of Rs. 27,88,29,335/-. The Respondent, Commissioner of Trade & Taxes, Department of Trade and Taxes (DT&T), Government of NCT of Delhi, issued the refund order on May 27, 2019. However, the DT&T calculated interest on the refund amount only from September 3, 2016, instead of from July 21, 2015, which is two months after the filing of the return. The Petitioner challenged this calculation of interest. The Respondent offered no explanation for the delay in complying with the legal requirements regarding interest payment.

Held

The Court held that the Respondent Department was liable to pay interest on the refund amount to the Petitioner from July 21, 2015. The Court referred to its previous decision in IJM Corporation Berhad v. Commissioner of Trade and Taxes (2018) 48 GSTR 102 (Del), which clarified that interest on refund is payable from the date the refund was due. Harmoniously reading Sections 38 and 42 of the DVAT Act, the Court found that interest is payable from the date the refund becomes due, which, in this case, is two months after the filing of the return. The Court found no excuse for the Respondent's failure to pay interest from July 21, 2015. The Court directed the Respondent to credit the differential interest to the Petitioner's account on or before August 31, 2019. Failure to do so would result in an additional compensation of Rs. 50,000/- to the Petitioner within two weeks thereafter.

Key Issues

1. Whether the Respondent Department is liable to pay interest on the refund amount to the Petitioner from July 21, 2015, or from September 3, 2016, as per Section 42(1)(a) of the Delhi Value Added Tax Act, 2004 (DVAT Act)? Petitioner's contention: The Petitioner argued that interest on the refund should be payable from July 21, 2015, which is two months after the filing of the return, as per the statutory provisions. They relied on the principle that interest is due when the refund becomes payable. Respondent's contention: The Respondent Department did not offer any explanation or specific argument regarding the delay in calculating the interest from the correct date. Their contention, as understood from the judgment, was that the starting point for interest payment was not the date of filing the return but a later date specified in Section 38(3) read with Section 42 of the Act.