The Bombay High Court earlier this month expressed ‘serious concern’ over the Income Tax department’s ‘tardiness’ and laxity in tax refund cases withheld for ‘no rhyme or reason’, resulting in a ‘huge interest burden’ on the Centre. Government or public funds.
The court said that if such ‘unnecessary interest amount’ to be paid by the court is saved, it can be used for other essential public expenses and the negligence of the officer will deprive the citizen of the benefit of such amount instead of paying the tax payer.
A bench of Justices Girish S Kulkarni and Advait M Sethna heard a petition filed by Bloomberg Data Services (India) Pvt Ltd on December 2, challenging the delay in tax refund of Rs 77.64 crore for assessment year 2013-14. and 2016-17.
The petitioner firm, through senior advocate Percy Pardiwala, argued that it could not make timely repayments and interest of Rs.3.1 crore was due to its client and was not given by the department. The firm has demanded immediate release of the refund along with applicable interest.
The bench said, “We are seriously concerned with such a situation… once the taxpayer is entitled to refund and there is no action against the assessee intended to be taken by the Revenue, the refund. The amount of tax, if any, should be immediately given to the assessee, as a rule. Necessary. If this violation is happening only because of the carelessness/recklessness of the department…the tax authorities who are not serious about such matter may be comfortable, but the payment of such interest cannot be forgotten from the taxpayer’s pocket goes.”
Justice Kulkarni, for the bench, questioned why proper communication between the authorities should not saddle the government with “unnecessarily large interest sums” and avoid an effective mechanism of rapid flow of instructions between the concerned authorities.
One wonders if the authority has any such mechanism or regular audit to find out who is responsible for the huge interest amount.
“As a constitutional court, we cannot ignore these issues and simply pass routine orders recording the receipt of grants/refunds,” the court said. It added that apart from the ‘serious prejudice’ caused to them by the assessment authority and the delay, it was ‘equally concerned with the larger public interest in the burden on the public exchequer’.
Posting another hearing on December 10, the high court asked the authorities to address the issue and sought an affidavit from the IT department as to what mechanism the concerned authorities have in place to avoid incurring huge interest amount.