Interest Has to Be Paid on Delayed Tax Refunds: HC

Hyderabad: A two-judge panel of the Telangana High Court upheld the plea that interest on delayed refunds under the Central General Sales Tax Act is payable automatically. The panel of Justice P. Sam Koshy and Justice N. Tukaramji allowed a writ petition filed by Qualcomm India Pvt. Ltd. and Microsoft Global in two separate writ petitions. The petitioners had filed a refund claim petition before the respondents, claiming refund of the unutilised ITC. Upon raising the claim, the respondents issued a deficiency memo to which the petitioners replied. Subsequently, showcauses notices were issued to which the petitioners replied and finally orders were passed rejecting the refund claims. The rejection was subjected to challenge in the appeals, filed by the petitioners, was substantially allowed and refund amounts were disbursed. Later on the petitioners moved applications with the respondents requesting grant of interest on the amount refunded by them for the period it was withheld by the department resulting in delayed release. In spite of persistent efforts by the petitioners, the interest on the delayed refunded amount was not granted. The request finally stood rejected by the department, which came to be challenged successfully before the High Court. Interpreting Section 56 of CGST Act, 2017 the judges said: “There is absolutely no ambiguity so far as the intention, object and purpose of enactment of the said provision. The heading of the said section itself says ‘interest on delayed refund’ which by itself leads to the only conclusion that can be drawn that of interest automatically accruing on the delayed refund made by the department. The very section starts with the wordings that of any tax ordered to be refunded is not refunded within the stipulated period of time, interest at such rate shall be payable on the said refund amount.” Justice Sam Koshy said, “We are of the considered opinion that the section, the proviso and its explanation provided to the section does not provide for any circumstances or situation under which the delayed refund does not attract interest. If we also look into the provisions of Rule 94 of the CGST Rules, 2017, the said provision also provides for certain periods, which shall not be included in the period for which the interest is payable. This in other words also means that interest on the delayed refund is automatic. As soon as there is a delay in refund of the money to the applicant beyond the period stipulated under Section 56 or where any amount is due and payable to the applicant under Section 56 and if the said amount of refund gets delayed, the said amount shall automatically be entitled to carry interest.” The panel further added, “there was no reason or material available with the department for not releasing the refund amount promptly. There was no preventive or prohibitory order or any such restrictive directions from any court of law in their favour from making refund within the stipulated time. In the said circumstances, non-granting of interest in such a case would amount failure to discharge statutory duty/obligation by the refund sanctioning authority.”

RDO cannot don collector’s role: HC

Justice K. Lakshman of the Telangana High Court declared that a revenue divisional officer (RDO) has no jurisdiction to entertain an appeal under the Non-Agricultural Land Assessment Act (NALA). The judge allowed a writ petition filed by businessman B. Yedukondala Raju and his wife questioning the order of the RDO Khammam district. The petitioners claim to be absolute owners and possessors of three acres of land in Khanapuram village. Rival claimants Ch. Narsimha Rao and two others filed a civil suit for the cancellation of the sale deeds in their favour. The suit was dismissed. An appeal against this is pending. “The petitioners with an intention to develop the subject land into residential plots have applied for conversion proceedings converting the subject land from agriculture to non-agriculture and obtained proceedings dated 03.10.2022 under the provisions of the Telangana Agricultural Land (Conversion for Non-Agricultural Purpose) Act, 2006. Based on the said conversion proceedings, the petitioners have applied for layout application.” The court order was challenged on the ground that the RDO had no jurisdiction to pass the order. Justice K. Lakshman pointed to Section 8 of NALA and said, “It envisages that any person aggrieved by an order of the tahsildar may file an appeal before the collector within sixty days of receipt of such order by the applicant.” The RDO, Justice Lakshman said, “is not a ‘collector’. Section 2 (f) says collector includes ‘joint collector,’ but not sub-collector or assistant collector. Therefore, an RDO cannot be treated as joint collector.” The judge accordingly set aside the notice and the interim order passed by the RDO.