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Allows Vodafone Idea Full Interest Despite Five-Year Delay in Seeking Refund
The ) in New Delhi has ruled that Vodafone Idea Ltd. is entitled to interest on refund of its service tax for the entire period from the date of deposit until the actual refund, even though the company delayed claiming the refund by over five years. The decision underscores that the under of the does not permit the department to curtail interest based on the reason for the delay.
Background: A Long Road from to Refund
In 2014, the Commissioner confirmed a service tax demand against the company, then known as Idea Cellular Ltd. To appeal before , Vodafone Idea made a of the demanded amount on . The company initially lost before the Tribunal but later succeeded before the , which delivered judgment in its favour on .
Despite this favourable outcome, the company did not immediately approach the department for refund. It sent a letter seeking refund of the along with interest only on – more than five years after the High Court's judgment. The department refunded the principal amount on , but granted interest for only 1,449 days (from deposit date up to the High Court judgment), refusing interest for the subsequent period on the ground that the delay was solely attributable to the .
The Legal Framework: and the Revenue's Reliance on Circular
The revenue argued that Circular No. 984/08/2014-CX provides that no formal refund application is required for refund of a ; a simple letter with a copy of the judgment suffices, and the refund should be granted within 15 days. Since Vodafone Idea took over five years to send that letter, the revenue contended that the company should not benefit from its own inaction by claiming interest for that period.
Vodafone Idea countered that
mandates interest from the date of deposit till the date of refund without any exception for delays caused by the
. The provision reads:
"Where an amount deposited by the
under
is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the
interest … on such amount from the date of payment of the amount till the date of refund of such amount."
Tribunal's Reasoning: Plain Language Prevails Over Equity
Technical Member P.V. Subba Rao, who heard the appeal, examined the statutory language and found no room for reading in an exception. He observed that the provision makes interest payable from the date of deposit until the date of refund regardless of the reason for the or who caused it.
The Tribunal acknowledged the apparent unfairness of allowing the to profit from its own delay but emphasized that equity cannot override clear statutory provisions. The judgment contrasted with other provisions under the , such as , which contain built-in inequities regarding the period for which interest is payable. Yet, those provisions too must be applied as written.
Key Observations from the Judgment
"Nevertheless, it is still entitled to interest under for the delay which it itself had caused. It is true that it is unfair that the should profit from its own actions but and the law must be applied regardless of the hardship or gain to the ."
" provides for interest from the date of till the date of refund of the regardless of the reasons for the and what or who caused it."
Decision: Full Interest Directed
The Tribunal allowed the appeal and modified the impugned order, directing the department to pay interest for the entire period from the date of () until the date of actual refund (). The decision reinforces the principle that on refund of pre-deposits cannot be reduced or denied due to the 's own delay in claiming the refund. It serves as a reminder that the law, not equitable considerations, governs the computation of interest under .
