DR. (LT COL) VIJAY SESHAN vs. UNION OF INDIA THROUGH THE SECRETARY, DEPT. OF REVENUE , MINISTRY OF FINANCE AND ORS

Heard learned counsel for the parties.

Rule. The rule is made returnable immediately at the request and with the consent of the learned counsel for the parties.

At the outset, Mr. Ramamurthy clarified that notwithstanding the broadly worded prayer clause, the petitioner now presses for interest on the refunds from 31 December 2021 to 20 October 2022. He pointed out that in terms of this Court’s order dated 21 October 2021 disposing of the petitioner’s Writ Petition No.6716 of 2021; the respondents were directed to decide on the issue of interest payment by 31 December 2021. However, such a decision was taken only on 20 October 2022. No interest was paid for this period, even though the petitioner was not responsible for the delay. He submitted that the respondents did not even bother to seek any extension of time from this Court. For all these reasons, Mr. Ramamurthy submitted that interest @ 15% p.a on the refund PRACHI PRANESH NANDIWADEKAR PRANESH NANDIWADEKAR Date: 2025.03.10 15:44:16 +0530

The rival contentions now fall for our determination.

At the outset, we refer to the order dated 01 October 2024 made by the Co-ordinate Bench in this matter, which reads as follows:- “1. Heard learned counsel for the Petitioner.

The Petitioner who is a ex-serviceman who has taken voluntary retirement from the Defence Services is before the Court for the third time. This time in view of the fact that the Petitioner although has been granted refund of taxes in relation to the Assessment Years 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2018-2019, however, has not been paid interest on the refund which are granted to him.

We have perused the averments as made in the Petition. We have also perused the reply affidavit filed by the Petitioner and rejoinder.

We find that there is no dispute in so far as the refund of income tax which was granted to the Petitioner in processing the refunds which were required to be considered de novo in pursuance of order dated 21 October 2021 passed by this Court in Writ Petition No.6716 of 2021. However, it also appears to be not in dispute that the Petitioner has, in fact, filed returns for the said Assessment Years from 5 June 2020 for which delay was also condoned by the Department. It appears that after the said order was passed by this Court in order to process the refund as also in the contest of the interest the Petitioner would be entitled, the Petitioner was called upon to e-file the same returns which was not different from what was filed earlier on 5 June 2022 and the said returns which were processed as refund was granted to the Petitioner on 20 October 2022 in respect of the said Assessment Years.

However, it appears that interest as payable to the Petitioner and as per the provisions of Section 244A, we do not find any cogent reason as to why

In this way of the matter, we adjourn the proceedings to 15 October 2024 ‘High on Board’, to enable the learned counsel for the Revenue to make a statement in regard to the release of the interest in favour of the Petitioner.

In the event, there is any justification otherwise from what we have observed above, the Respondents are not inclined to grant interest to the Petitioner, in that event, an additional affidavit on behalf of the Respondent be placed on record clearly explaining as to why the Petitioner would not be entitled to the refund, failing which there would be no alternative but to pass appropriate order and grant interest to the Petitioner for the tax which was collected and subsequently was refunded to the Petitioner.

Stand over to 15 October 2024 High on Board.”

Pursuant to the above order, the respondent has filed necessary affidavits. Mr. Khanchandani's arguments are reflected in these affidavits. However, the affidavits crucially do not explain why the respondent should not pay the petitioner interest between 1 January 2022 and 20 October 2022. 8. However, Mr. Khanchandani now explained that the petitioner failed to file an online return to process the refund. This return was filed only on 27 February 2022. He, therefore, submitted that no interest was payable in the absence of any online return.

Even if we accept Mr Khanchandani’s contention partly that no online return was filed up to 27 February 2022, there is no explanation for why no interest was payable from the date of receipt of this return and the actual date of refund. Besides, there is no explanation why this requirement of filing a digital return as being the alleged cause for denial of refunds was not intimated to the petitioner within six weeks as directed by this Court in its order dated 21 October 2021. In any event, there is no explanation for

Accordingly, we partly allow this petition and direct the respondents to pay interest @ 6% p.a. on the refunds between 1 March 2022 and 19 October 2022. This amount must be computed and paid to the Petitioner within four weeks from this order's uploading date.

For any reason, if the amount is not paid within four weeks, and the petitioner is forced to come to this Court for 4th or 5th time on this small issue, then the 2nd respondent will have to pay the cost of Rs.50,000/- to the petitioner personally and not from the

The compliance report must be filed in this Court by 1 May 2025, with an advance copy sent to the learned counsel for the petitioner.

The rule is made partly absolute in the above terms without any cost order for the present. However, in case of compliance default, the second respondent will personally pay Rs.50,000/- to the petitioner. All concerned to act on the authenticated copy of this order.