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The high court noted that delayed payment of refunds not only burdens the public exchequer with such interest amounts being required to be paid, but it also brings about a situation that the assessees are deprived of these amounts causing them a serious prejudice
The Bombay High Court has recently expressed its concern over the rising interest burden on the Central Government due to delays in tax refunds.
“We may also observe that routinely cases are reaching this Court where refunds for no rhyme or reason are stuck, they are either not being processed or if even processed, they are not being released and in such cases the interest burden on the Government of India / Public exchequer keep mounting every passing day,” the order orders.
A division bench of the high court comprising Justice GS Kulkarni and Justice Advait Sethna was hearing a petition filed by Bloomberg Data Services (India) Pvt. Ltd. seeking refunds for the assessment years 2013-14 and 2016-17 that amounted to Rs. 77,64,71,629.
The petitioner informed the bench that on 29 November 2024, a refund was given for AY 2016-17 and 2013-14. However, the bench was informed that the interest of Rs. 1,83,37,215 for A. Y. 2016-17 and Rs. 1,27,21,649 for A. Y. 2013-14, totalling to an amount of Rs. 3,10,58,865 (Rs.3.10 Crores) is due and payable to the petitioner which has not been granted.
The counsel appearing for the Income Tax Department sought time to seek instructions.
The bench said that it was not aware as to whether the income tax department has any procedure of any internal control/checks in such matters, in which the interest burden keeps increasing purely for departmental reasons, which may be either negligence or a casual approach on the part of the officials, not taking prompt and timely steps on such issues.
The bench observed that “As a Constitutional Court, we cannot overlook these issues and merely pass routine orders recording grant / receipt of refund. This ought not to be the only concern of the Court, in considering the legal rights of the assessees, as the Court would be equally concerned with the larger public interest of a burden on the public exchequer, when it is noticed the Court that for no justifiable reasons, such refunds are blocked and huge interest in that regard is ultimately paid by the Government of India,” the order reads.
Furthermore, it flagged the laxity on the part of the government and said that “..why this laxity or lack of prompt and appropriate communication between two authorities / departments, should result in Government of India being unwarrantedly saddled with huge interest amounts is the issue. This can certainly be avoided by an effective mechanism, by having a meaningful and prompt flow of instructions between the concerned officers, handling the assessee’s case. Such unwarranted interest amounts being required to be paid, if saved can be utilized for other essential public expenditures. It is the citizens of the country who are being deprived of the benefits of such amounts instead of the same being paid to the assessee’s, on account of the negligence and/or the fault of the officers of the department,” the order reads.
The high court noted that delayed payment of refunds not only burdens the public exchequer with such interest amounts being required to be paid, but it also brings about a situation that the assessees are deprived of these amounts causing them a serious prejudice.
Case title: Bloomberg Data Services vs The Deputy Commissioner of Income Tax
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