UPS Freight Services India Private Limited Vs DCIT Central Circle-3-2 (Bombay High Court)
Summary: Bombay High Court held that UPS Freight Services India Private Limited was entitled to interest at 6% per annum on a refund of Rs.62,81,983/- that was unduly retained by the Income Tax Department despite the refund having crystallised under the Direct Tax Vivad Se Vishwas Act, 2020. Form No.5 was issued on 15.06.2021 and reflected the amount as refundable. Under the CBDT Central Action Plan for 2021-22, consequential orders and refunds in Vivad Se Vishwas cases where Form No.5 had been issued up to 30.06.2021 were required to be completed by 31.07.2021. However, the consequential order was passed only on 21.06.2022 and the refund was ultimately credited on 26.05.2023.
The Department attributed the delay merely to technical issues without furnishing a substantial explanation. Relying upon Union of India v. Tata Chemicals Ltd. and the principle that money wrongfully retained by the State carries a corresponding obligation to compensate the person entitled to it, the High Court held that absence of a specific interest provision under the DTVSV Act did not justify retention of the taxpayer’s money without interest. It awarded interest at 6% per annum, corresponding to the rate prescribed under Section 244A of the Income Tax Act, from 01.08.2021 to 26.05.2023.
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