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2024 Supreme(All) 614
IN THE HIGH COURT OF ALLAHABAD
SHEKHAR B. SARAF, J.
Vinod Kumari – Appellant
Versus
State Of U.P. And Others – Respondent
Writ C No.5832 of 2024
Decided on : 08-04-2024
Advocate Appeared:
For the Appellant : Jeet Bahadur Singh
The State is required to pay interest for the delay in refund of excess stamp duty collected, even in the absence of a specific provision in the Indian Stamp Act, 1899 for payment of interest on such refunds, based on the principles of Article 265 of the Constitution of India.
Headnote:
Interest - Refund of Stamp Duty - The court held that the State is required to pay interest for the delay in refund of excess stamp duty collected, even if there is no specific provision in the Indian Stamp Act, 1899 for payment of interest on such refunds. The court relied on Article 265 of the Constitution of India, which prohibits the collection of tax without authority of law and requires the return of any amount collected dehors the law, and held that the time for which the amount was illegally detained by the Government is required to be compensated for by the Government by way of payment of interest thereon.
Fact of the Case:
The petitioner sought interest on the delayed payment of the refund of stamp duty that was deposited by the petitioner. The authority rejected the application for interest, stating that there is no provision in the Indian Stamp Act, 1899 for payment of interest on refund of excess stamp duty.
Finding of the Court:
The court rejected the stand of the revenue and held that the State is required to pay interest for the delay in refund. The court directed the authority concerned to pay interest at the rate of 5 per cent from one month after the passing of the order directing the refund till the date when the refund was made.
Issues: The main issue was whether the State is required to pay interest for the delay in refund of excess stamp duty collected, despite the absence of a specific provision in the Indian Stamp Act, 1899 for payment of interest on such refunds.
Ratio Decidendi: The court relied on Article 265 of the Constitution of India, which prohibits the collection of tax without authority of law and requires the return of any amount collected dehors the law. The court held that the time for which the amount was illegally detained by the Government is required to be compensated for by the Government by way of payment of interest thereon.
Final Decision: The court directed the authority concerned to pay interest at the rate of 5 per cent from one month after the passing of the order directing the refund till the date when the refund was made, and disposed of the writ petition.
JUDGMENT :
1. Heard learned counsel for the petitioner and the learned Standing Counsel for the State
2. This is a writ petitioner under Article 226 of the Constitution of India wherein the order dated January 24, 2024 passed by the Additional District Magistrate (Finance/Revenue), Aligarh is under challenge.
3. By the order impugned, the authority concerned rejected the application of the petitioner seeking interest on the delayed payment of the refund of stamp duty that has been deposited by the petitioner.
4. On perusal of the facts, it is clear that the order for refund of the amount of Rs.5,35,454/- was passed on September 19, 2013. However, the authority concerned refunded this amount only on December 5, 2023. The stand taken by the respondent authorities is that there is no provision in the Indian Stamp Act, 1899 for payment of interest on refund of excess stamp duty that has been collected by the revenue. In light of the same, counsel for the respondent submitted that no interest is payable even if there is lackadaisical approach by the authorities in returning of the refund.
5. The stand of the revenue is rejected outrightly as the State has no power to hold on the money that it has taken without any authority of law. Article 265 of the Constitution of India clearly provides that no tax can be collected without authority of law and any amount that has been collected is dehors the law and is required to be returned to the person concerned. As a natural corollary, the time for which the amount was illegally detained by the Government, is required to be compensated for by the Government by way of payment of interest thereon. There is no requirement of any specific provision for the payment of interest in such circumstances. In light of the same, I am of the view that the authority concerned is required to pay interest for the delay in refund.
6. Accordingly, the authority concerned is directed to pay interest at the rate of 5 per cent from October 19, 2013 (one month after passing of the order directing the refund) till December 5, 2023 (when the refund was made). The said amount should be paid by the authority concerned within six weeks from date.
7. With the above observations, the writ petition is disposed of.
