The Allahabad High Court held that where revenue has illegally detained excess stamp duty collected by the authorities under the Indian Stamp Act, 1899, interest must be paid by the Government even if there is no provision providing for such interest.
Brief Facts:
In September 2013, an order of refund of Rs.5,35,454/- was passed in favour of the petitioner. However, the amount was refunded in December 2023. Petitioner moved an application seeking interest on the delayed payment of the refund amount. Additional District Magistrate (Finance/Revenue), Aligarh rejected the application filed by the petitioner on the grounds that there is no provision under the Indian Stamp Act, 1899 for payment of interest on refund of excess stamp duty that has been collected by the revenue.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent contended 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 and further submitted that no interest is payable even if there is lackadaisical approach by the authorities in returning of the refund.
Observations of the court:
The court stated that the stand of the revenue is rejected outrightly as the State has no power to hold onto the money that it has taken without any authority of law. Further, it was stated that Article 265 of the Constitution of India clearly provides that no tax can be collected without the authority of law and any amount that has been collected dehors the law and is required to be returned to the person concerned.
Further, it was stated that 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 and there is no requirement of any specific provision for the payment of interest in such circumstances.
The decision of the Court:
The court concluded that the authority concerned is required to pay interest for the delay in the refund and directed the authority to pay interest at the rate of 5 per cent from October 19, 2013 (one month after the passing of the order directing the refund) till December 5, 2023 (when the refund was made).
Case Title: Vinod Kumari vs State of U.P and Ors.
Coram: Hon’ble Mr. Justice Shekhar B. Saraf
Case No.: WRIT - C No. - 5832 of 2024
Advocate for the Petitioner: Jeet Bahadur Singh
Advocate for the Respondent: C.S.C
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