Delhi High Court mandates interest on delayed tax refunds

The Delhi High Court has ruled that a petitioner is entitled to interest on delayed refunds determined under the Direct Tax Vivad Se Vishwas Act, 2020. The case involved a claim for refunds totaling over Rs. 17 crore for assessment years 2010-11 and 2011-12.

The Revenue Department argued that the Act did not provide for interest on refunds and cited technical issues and administrative complications involving the deceased assessee's PAN numbers as reasons for the delay. The Court rejected these explanations, stating that technical issues at the Central Processing Centre (CPC) do not benefit the Tax Department.

Citing the principle from Union of India vs. Tata Chemicals Limited, the Court held that the State has an obligation to compensate for the retention and use of money without right. Consequently, the Court directed that interest be paid on the refund amount for the period of delay exceeding ninety days from the date the refund was determined.