SC Grants 8% Interest on Lost E-Stamp paper Refund, Citing Retention Doctrine

Dr. Poornima Advani & Anr. Vs Government of NCT & Anr. (Supreme Court of India)

Subject: Whether when e-stamp paper is lost and refund is delayed, the petitioner is entitled to interest on such delayed refund?

Summary: The Supreme Court of India ruled that interest at 8% per annum must be paid on the refund of lost e-stamp duty, reinforcing the principle that money received and retained without right carries an obligation to pay interest. The case, Dr. Poornima Advani & Anr. vs. Government of NCT & Anr., involved the loss of an e-stamp paper valued at Rs. 28.1 lakh, for which a refund was initially denied. The High Court intervened to allow the refund but denied interest. The petitioners then appealed before a division bench, arguing that they were entitled to interest on the refund amount. The Supreme Court extensively analyzed legal precedents, including Authorised Officer, Karnataka Bank vs. RMS Granites Pvt Ltd., to determine the nature and necessity of interest payments. The Court emphasized that in the absence of an express statutory provision for interest on refunds of excess tax, the government cannot evade its obligation to reimburse taxpayers with accrued interest. Upholding the doctrine of undue retention, the Court stated that if the state has received and utilized money without legal right, it is bound to compensate the rightful owner with interest.