The Supreme Court has held that there is no statutory provision required for interest payment and the interest is payable on refund of the amount on e-stamp paper.
The bench of Justice J.B. Pardiwala and Justice R. Mahadevan has observed that when a person is deprived of his right to use money to which he is legitimately entitled, he has a right to be compensated for the deprivation which may be called interest or compensation. Interest is paid for the deprivation of the use of money in general terms which has been returned or compensation for the use or retention by a person of a sum of money belonging to others.
The appellant was desirous of purchasing an immovable property in New Delhi. For that purpose, they purchased the e-stamp paper valued at Rs.28,10,000. The money for that purpose was paid from the joint bank account of the appellants being husband and wife respectively. The e-stamp paper which came to be purchased was dated 06.07.2016.
The issue raised was whether the circumstances in which the refund was prayed for by the appellants herein, would be a relevant consideration for ordering refund of the said amount.
In other words, the Single Judge asked a question to himself whether the court, should fold its hands and deny relief to a person, who has lost the e-stamp paper, only because the draftsman has omitted the use of such expression explicitly in the Statute.
After an exhaustive discussion on various aspects of the matter, the learned Single Judge thereafter proceeded to draw a fine distinction between the ‘doctrine of unjust enrichment’ as opposed to ‘doctrine of retention’. Ultimately, the Single Judge allowed the writ petition in part.
The appellants herein being dissatisfied with non-grant of interest on the sum of Rs. 28,10,000 preferred Letters Patent Appeal.
The court held that when the collection is illegal, the Revenue is obliged to refund such amount with interest as money so deposited was retained and enjoyed by it. No discrimination can be shown between the assessee and Revenue in paying interest on the refund of tax.
“Money received and retained without right, carries with it the right to interest. There being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, the Government cannot shrug off its apparent obligation to reimburse the deductors lawful monies with accrued interest for the period of undue retention of such monies. Obligation to refund money received and retained without right implies and carries with in the right to interest,” the court said.
Case Details
Case Title: Dr. Poornima Advani & Anr. Versus Government Of Nct & Anr.
Case No.: Civil Appeal No. 2643 Of 2025
Date: 18/02/2025
Read More: Environment and Tax in India
