Castrol India Limited Vs State of Jharkhand (Jharkhand High Court)
In the case of Castrol India Limited vs. State of Jharkhand, the Jharkhand High Court addressed a dispute concerning delayed VAT refund payments under the Jharkhand Value Added Tax (JVAT) Act, 2005. Castrol India filed a writ petition seeking the refund of ₹1,47,62,037 for the Assessment Year 2011-12, along with statutory interest under Section 55 of the JVAT Act. The refund claim arose after reassessment proceedings reduced Castrol’s tax liability, and an excess tax payment was acknowledged by the Department in an official notice dated 31.08.2020. However, the excess demand notice was only served to Castrol on 15.12.2022, after which the refund application was promptly filed.
Despite the application being submitted within the prescribed 90-day period, the refund was not processed in a timely manner. The department refunded the principal amount only on 29.03.2024, after the writ petition was filed, but failed to address the issue of statutory interest. The High Court noted that the Department provided no valid justification for either the delayed service of the demand notice or the prolonged processing of the refund application. The Court also found that insisting on settlement of other dues before processing the refund was not legally tenable, as held in a prior decision (M/s Kirloskar Brothers Ltd. v. State of Jharkhand).
