Interest should be Computed from Date of Order passed by DVAT Appellate Tribunal: Delhi HC [Read Order]

The Delhi High Court held that the interest should be computed from date of order passed by the Delhi Value Added Tax ( DVAT ) Appellate Tribunal.

The Petitioner preferred the writ petition before the Court seeking refund of the amount deposited with interest and the same was disposed of vide order, directing the Respondents to decide the claim of petitioner within four weeks. Vide Sanction Order dated 03.07.2023, the entire deposited amount was refunded along with interest of Rs. 10,322/- calculated from the date of order of the Appellate Tribunal i.e. 10.05.2023 at the rate of 6% per annum.

The counsel for petitioner has submitted that Delhi Value Added Tax Act Appellate Tribunal [“DVAT Tribunal”] vide its order dated 10.05.2023 has concluded that petitioner is not a “dealer” in terms of provisions of DVAT Act, 2004 and accordingly the provisions of DVAT Act are not applicable in the present case. That being so, the sum of Rs. 10,32,138/- deposited by the petitioners with the respondents was neither a tax nor a penalty for violation of any provision of DVAT Act. Such amount was illegally retained by the respondents for over a period of 17 years without authority of law, and therefore, respondents are bound to compensate petitioner by way of interest at the market rate.

Per contra, the Standing Counsel for the respondents has argued that the term, employed in Sections 38 and 42 of the DVAT Act is “person” and not “dealer”, which would certainly include within its fold any person including the transporter and, therefore, to give a restricted meaning to the word, “person”, occurring in Sections 38 and 42 of the DVAT Act would be contrary to the intention of the legislature, which has explicitly and consciously employed the term, “person” and not “dealer” and if the contention of the petitioner is accepted, it would be tantamount to doing damage to the literal meaning of the said provisions as well as intention of legislature in enacting the said provisions.

 A Division Bench of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “Section 42 of the DVAT Act provides that the interest shall be computed from the date when refund was due to be paid to the person until the date of refund. Admittedly, the refund became payable consequent to the orders passed by the DVAT Appellate Tribunal. The interest therefore shall be computed from the date(s) of the orders passed by the DVAT Appellate Tribunal.”

“Admittedly, statutory rate of interest is 6% by virtue of notification dated 30.11.2005. The Tribunal vide order dated 26.08.2021 had set aside the notice of penalty amounting to Rs. 4,91,096/- under Section 86(19) and, therefore, interest on such amount shall be computed and payable from 26.08.2021 at the rate of 6% p.a. till the date of refund” the Court ordered.

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