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Karnataka High Court
M/S Shree Renuka Sugars Limited vs The Assistant Commissioner Of Income ... on 15 December, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 25.11.2025
Pronounced on : 15.12.2025
IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH
DATED THIS THE 15TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.101678 OF 2024 (T - IT)
BETWEEN:
M/S.SHREE RENUKA SUGARS LIMITED
(A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956)
(REPRESENTED BY RAHUL PATIL
SENIOR GENERAL MANAGER
S/O GANAPATRAO PATIL
AGED ABOUT 43 YEARS)
105, HAVELOCK ROAD,
CONTONMENT CAMP,
BELAGAVI - 590 001.
... PETITIONER
(BY SRI CHYTHANYA K.K., SR.ADVOCATE FOR
SRI SHASHANK S.HEGDE AND
SRI TATA KRISHNA, ADVOCATES)
AND:
1 . THE ASSISTANT COMMISSIONER
OF INCOME TAX
CIRCLE 1, BELAGAVI,
OPP. CIVIL HOSPITAL
DR. B.R.AMBEDKAR ROAD,
BELAGAVI - 590 001.
2
2 . PRINCIPAL COMMISSIONER
OF INOME TAX,
HUBLI, C.R.BUILDING,
P.B.ROAD, NAVANAGAR,
HUBLI - 580 025.
... RESPONDENTS
(BY SRI M.THIRUMALESH AND
SMT.ROOPA, ADVOCATES)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO (A) ISSUE AN
APPROPRIATE WRIT OR ORDER IN THE NATURE OF MANDAMUS OR
OTHERWISE, DIRECTING THE RESPONDENTS TO GRANT INTEREST
ON DELAYED REFUND OF RS.2,60,92,283/- AT THE RATE OF 6%
FROM 25.05.2021 (BEING 90 DAYS FROM 24.02.2021, I.E. DATE
OF ISSUE OF FORM 5 BY THE DESIGNATED AUTHORITY) UP TO
10.01.2024 (BEING DATE OF PAYMENT OF REFUND) OR
ALTERNATIVELY AT THE RATE OF 6% FOR THE PERIOD OF DELAY
FROM 31.07.2021 (I.E. THE DUE DATE FOR PASSING OF
CONSEQUENTIAL ORDER TO FORM 5 AS PER THE CENTRAL ACTION
PLAN FOR FY 2021-22 FORMULATED BY THE CBDT) TO 10.01.2024
(BEING DATE OF PAYMENT OF REFUND]; (B) ISSUE AN
APPROPRIATE WRIT OR ORDER IN THE NATURE OF MANDAMUS OR
OTHERWISE, DIRECTING THE RESPONDENTS TO GRANT FURTHER
INTEREST ON SUCH INTEREST AS PRAYED IN (A) ABOVE, FROM
10.01.2024 (BEING DATE OF PAYMENT OF REFUND WITHOUT
INTEREST) UPTO THE DATE OF ACTUAL PAYMENT OF INTEREST.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 25.11.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
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CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioner is before this Court seeking the following
prayer:
"A) Issue an appropriate writ or order in the nature of
Mandamus or otherwise, directing the Respondents to
grant interest on delayed refund of Rs. 2,60,92,283/-at
the rate of 6% from 25.05.2021 (being 90 days from
24.02.2021, i.e. date of issue of Form 5 by the
designated authority) up to 10.01.2024 [being date of
payment of refund] or alternatively at the rate of 6% for
the period of delay from 31.07.2021 [i.e. the due date for
passing of consequential order to Form 5 as per the
Central Action Plan for FY 2021-22 formulated by the
CBDT] to 10.01.2024 [being date of payment of refund];
(B) Issue an appropriate writ or order in the nature of
Mandamus or otherwise, directing the Respondents to
grant further interest on such interest as prayed in (A)
above, from 10.01.2024 [being date of payment of refund
without interest] upto the date of actual payment of
interest;
(C) Grant such other relief's as this honourable High Court
may think fit including the costs of this writ petition."
2. Facts in brief, germane, are as follows:
2.1. The petitioner is a Company incorporated under the
provisions of the Companies Act, 1956 and is engaged in the
business of manufacturing, trading and supply of sugar and its
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allied products. It transpires that the Assistant Commissioner of
Income Tax, Circle-2(1), Belagavi, passes an order of assessment
under Section 143(3) read with Section 147 of the Income Tax Act,
1961 (hereinafter referred to as the 'Act' for short) for the
assessment year 2008-2009, determining the tax payable at
₹4,36,47,080/- as obtaining on 24-03-2016. The petitioner,
aggrieved by the said determination, files an appeal before the
Commissioner of Income Tax (Appeals) on 27-04-2016. The
petitioner then files a declaration in Form No.1 and undertaking in
Form No.2, in accordance with the provisions of the Direct Tax
Vivad Se Vishwas Act, 2020 (hereinafter referred to as the 'Act,
2020' for short) for the impugned assessment year 2008-2009 on
11-07-2020.
2.2. The Principal Commissioner of Income Tax is said to have
issued a certificate under Section 5(1) of the Act, 2020 in Form
No.3 determining the amount refundable to the petitioner in terms
of the scheme at ₹2,60,092,283/- for the said assessment year
2008-2009 and the determination is made on 19-01-2021. The
petitioner then files an intimation of payment under Section 5(2) of
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the Act, 2020 in Form No.4 for the assessment year 2008-2009. It
transpires that the order is passed declaring full and final
settlement of tax arrears under Section 5(2) r/w Section 6 of the
said Act, 2020. Giving effect to the order so passed on 24-02-2021
of full and final settlement and determining the tax refundable of
₹2,60,92,283/-, a communication comes to be issued to the
petitioner on 11-04-2022.
2.3. An intimation letter is further issued on 08-07-2022
proposing to adjust the refund due of the aforesaid amount against
the demand for the assessment year 2018-2019 raised under
Section 270A of the Act. The petitioner then is said to have
communicated on 11-07-2022 objecting to the proposed
adjustment of refund against the demand for the assessment year
2018-2019 arising under Section 270A, on the ground that the
demand for assessment year 2018-2019 had been stayed by this
Court in a writ petition filed by the present petitioner and an interim
order to that effect was operating as granted on 29-06-2022. The
petitioner then communicates to the 1st respondent on 05-09-2022
seeking issue of refund of ₹2,60,92,283/- as was determined. An
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intimation was issued proposing to adjust the refund against a
demand for assessment year 2018-2019 invoking the same
provision that was earlier invoked. An appeal was filed against the
said order, which comes to be dismissed as withdrawn in terms of
the Act, 2020.
2.4. The petitioner then goes on objecting to the proposed
adjustment of refund for the assessment years 2009-2010 and
2018-2019. Owing to such objections, it transpires that on
11-05-2023, the refund is said to have been released in favour of
the petitioner, which comes to be informed to the petitioner on
12-06-2023. The petitioner then communicates to the department
seeking the said refund, as it had not yet been into the account of
the petitioner. The refund is then determined and stood credited to
the bank account of the petitioner on 10-01-2024. The petitioner is
now before the Court seeking interest to the amount of refund on
10-01-2024 which gave effect to the order in Form No.5 dated
24-02-2021 and beyond the due date by which the amount had to
be paid - 31-07-2021. The petitioner sought interest for the said
delayed payment of over 3 years, which the petitioner projected
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that it was a loss caused to them. No interest on refund is granted.
Therefore the petitioner is before this Court seeking the aforesaid
prayer.
3. Heard Sri Chythanya K.K., learned senior counsel
appearing for petitioner and Sri M Thirumalesh, learned counsel
appearing for the respondents.
4. The learned Senior Counsel Sri Chythanya K.K. appearing
for the petitioner would vehemently contend that the refund
amount ought to have been credited to the account of the petitioner
way back in the year 2021, it is credited only in the year 2024.
Therefore, there is delay. Interest is paid on delay, but the interest
on interest is what the petitioner is now seeking. According to the
learned Senior Counsel, the interest becomes a component of
refund if it is not paid within time. Therefore, the petitioner
becomes entitled to interest on the corpus, which becomes a part of
the amount of refund. He would submit that the issue is no longer
res integra. The High Courts of the country have considered this
issue and have laid down the law that interest on interest should be
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paid to the assessee if there is delay on the part of the department.
He would seek the same relief to be granted in the case at hand as
well.
5. Per contra, the learned counsel Sri M. Thirumalesh,
appearing for the respondents submits that the refund is already
granted to the petitioner in Form No.5 which was dated 24-02-2021
and the due date was on 31-07-2021. Since the refund is already
granted, the petitioner would not become entitled to any interest in
terms of law, as the refund is processed under the Act, 2020, which
notified a particular scheme. He would seek dismissal of the
petition.
6. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
7. The afore-narrated facts are a matter of record, they are
beyond contest. The issue is with regard to the refund that the
petitioner was entitled to, according to the
respondents/department. Towards the said refund, the petitioner
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and the department have plethora of correspondences between
them. The assessment of refund is made under the Direct Tax Vivad
Se Vishwas Act, 2020. The communication that is germane to be
noticed is dated 11-04-2022 and it reads as follows:
"Order Giving Effect To Order u/s 5(2) Read With Section 6 of
The Direct Taxes Vivad Se Vishwas Act, 2020
The assessment order u/s 143(3) r.w.s 147 of the Income
Tax Act, 1961 has been passed on 24.03.2016 assessing the
total income at NIL for the A.Y. 2008-09. The assessee filed the
appeal before the CIT(A), Belagavi against the said assessment
order. Further, the assessee has opted for Direct Tax Vivad Se
Vishwas Scheme, 2020 and filed Form No.1. The Pr.
Commissioner of Income Tax, Hubballi has issued Form No. 5
and passed order for full and final settlement of Tax arrears u/s
5(2) read with section 6 of the Direct Tax Vivad se Vishwas Act,
2020 granting immunity from penalty and prosecution under the
Income Tax Act, 1961 in respect of tax arrears and waiver of
interest. The same is given effect as under:
10
Sd/-
(SINGHVI RONAK KUNDANMAL, IRS)
Assistant Commissioner of Income Tax
Circle-1, Belagavi."
The intimation is sent to the petitioner in terms of Section 245 of
the Act. The said intimation reads as follows:
"Dear Sir/Madam,
Subject: Intimation under section 245 of Income Tax Act, 1961
Please refer to the proceedings under section 5(2) passed by
CIRCLE 1, BELGAUM which has resulted into refund.
The refund determined will be adjusted against the outstanding
demand as shown in "Outstanding Demand table" annexed
herewith.
→Your return has been processed at CPC and the same has
resulted in refund. The refund so determined will be adjusted
against the outstanding demand as shown in "Outstanding
Demand table" annexed herewith."
The petitioner objects to the intimation under Section 245, which
projected adjustment for the assessment years 2008-2009 under
Section 270A of the Act. The said objection of the petitioner reads
as follows:
"To
The Assistant Commissioner of Income Tax
Circle 1, Belgaum
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Respected Sir
Sub: Submission against intimation u/s 245 in the
case of Shree Renuka Sugars Limited PAN:
AADCS1728B for AY 2008-09
Ref: CPC Intimation u/s 245 DIN: CPC / 0809 /
G8i / ITBA#10000000000001480838 dated
08-07-2022
This is to inform you that for AY 2008-09, we had applied under
Vivad se Vishwas Act, 2020, for settlement of the appeal of the
said year. On 24-02-2021, PCIT Hubli passed Order for Full and
Final Settlement of Tax Arrear under section 5(2) read with
section 6 of the Direct Tax Vivad se Vishwas Act, 2020, wherein
he has determined by Certificate No. 219806080190121 dated
19/01/2021 the amount of Rs. 2,60,92,283/-refundable to us.
Copy of order is enclosed vide Annexure I.
Now, we have received the above referred intimation u/s 245
from the Centralised Processing Center, wherein they have
proposed to adjust this refund of Rs. 2,60,92,283/- against the
demand raised u/s 270A for AY 2018-19 of Rs. 227,08,34,288/-
Copy of the intimation is enclosed vide Annexure II. The
intimation u/s 245 also stated the procedure to file an online
response against this outstanding demand. However, when we
tried to follow the steps provided, the portal showed a message
stating "This demand is already confirmed by AO. Please contact
your jurisdictional Assessing Officer for details". Copy of
screenshot is enclosed vide Annexure III.
Hence, we are making this submission to inform you that the
Hon'ble High Court of Karnataka, Dharwad Bench, has already
granted us a stay of demand against the demand raised u/s
270A for AY 2018-19 vide its order dated 29-06-2022. Copy of
the order is enclosed vide Annexure IV.
Thus, we request you not to adjust the refund of AY 2008-09 of
Rs. 2,60,92,283/- against the demand of AY 2018-19 of Rs.
227,08,34,288/-, for which the Hon'ble High Court of Karnataka,
Dharwad Bench, has already granted a stay of demand, and also
request you to issue the refund at the earliest."
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What could be gathered from the aforesaid communications is, that
under the Act, 2020 refund of ₹2,60,92,283/- was determined
under order in Form No.5 on 24-02-2021. On such determination, it
was credited to the account of the petitioner, not on 24-02-2021,
but on 10-01-2024. Therefore, there is clear delay of 35 months in
crediting the amount of refund so determined by the respondents
as on 24-02-2021.
8. The issue is, whether the petitioner would become entitled
to interest on the said refund from 24-02-2021, till it reached the
doors of the petitioner on 10-01-2024?
9. The determination of amount is admittedly ₹2,60,92,283/-.
This forms the corpus of refund. It is delayed by 35 months.
Therefore, the interest on refund ought to have been granted to the
petitioner. Whether the amount of interest that stood determined or
that is grantable to the petitioner from 24-02-2021 to 10-01-2024
forms the principle or the corpus for grant of an interest on that
interest, is required to be considered, as that is what the learned
senior Counsel has projected.
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10. The said issue need not detain this Court for long or delve
deep into the matter. Plethora of judgments are placed reliance
upon by the learned senior Counsel, two of which, are germane to
be noticed. The Apex Court in the case of COMMISSIONER OF
INCOME TAX v. H.E.G. LIMITED1, has held as follows:
"1. Mr Ajay Vohra, learned counsel, appears for the
respondent assessee. Delay condoned in SLP (C) No. CC 10437
of 2009. Leave granted.
2. In income tax matters, it is well settled that if the
question is not properly framed, then, at times, confusion arises
resulting in wrong answers. The present batch of civil appeals is
an illustration of the proposition mentioned hereinabove. In the
synopsis to the civil appeal arising out of SLP (C) No. 18045 of
2009, the question raised by the Department is whether the
assessee was entitled to claim interest on interest under the
provisions of Section 244-A of the Income Tax Act, 1961. In our
view, on facts, the question framed was totally erroneous.
3. Annexure P-1 is income tax computation in civil appeal
arising from SLP (C) No. 18045 of 2009. On going through the
computation, we find that during Assessment Year 1993-1994,
the amount paid by the assessee towards TDS was Rs
45,73,528. The tax paid after original assessment was Rs
1,71,00,320. The total of TDS amounting to Rs 45,73,528
plus tax paid after original assessment of Rs 1,71,00,320
stood at Rs 2,16,73,848. In other words, the total tax
paid had two components viz. TDS + Tax paid after
original assessment. The respondent was entitled to the
refund of Rs 2,16,73,848 (consisting of Rs 1,71,00,320
and Rs 45,73,528 which payment was made after 57
months and which is the only item in dispute). The
assessee claimed statutory interest for delayed refund of
1
(2010) 324 ITR 331
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Rs 45,73,528 for 57 months between 1-4-1993 and 31-
12-1997 in terms of Section 244-A of the Income Tax Act.
Therefore, this is not a case where the assessee is
claiming compound interest or interest on interest as is
sought to be made out in the civil appeals filed by the
Department.
4. The next question which we are required to
answer is--What is the meaning of the words "refund of
any amount becomes due to the assessee" in Section
244-A?
5. In the present case, as stated above, there are
two components of the tax paid by the assessee for which
the assessee was granted refund, namely, TDS of Rs
45,73,528 and tax paid after original assessment of Rs
1,71,00,320. The Department contends that the words
"any amount" will not include the interest which accrued
to the respondent for not refunding Rs 45,73,528 for 57
months. We see no merit in this argument. The interest
component will partake of the character of the "amount
due" under Section 244-A. It becomes an integral part of
Rs 45,73,528 which is not paid for 57 months after the
said amount became due and payable. As can be seen
from the facts narrated above, this is the case of short
payment by the Department and it is in this way that the
assessee claims interest under Section 244-A of the
Income Tax Act. Therefore, on both the aforestated
grounds, we are of the view that the assessee was
entitled to interest for 57 months on Rs 45,73,528. The
principal amount of Rs 45,73,528 has been paid on 31-
12-1997 but not of interest which, as stated above,
partook the character of "amount due" under Section
244-A.
6. For the aforestated reasons, the civil appeal arising out
of SLP (C) No. 18045 of 2008 filed by the Department fails and
is dismissed, with no order as to costs.
7. In view of the above order, the civil appeals arising out
of SLP (C) No. 18046 of 2009 and CC No. 10437 of 2009, filed
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by the Department, are also dismissed, with no order as to
costs."
(Emphasis supplied)
The High Court of Rajasthan, in an identical circumstance, in the
case of DWEJESH ACHARYA v. INCOME TAX OFFICER2, holds as
follows:
".... .... ....
10. A perusal of Form No. 5 (Annex. 9) clearly
reveals that the order has been passed by the designated
authority under the VSV Act, 2020 and Rules determining
the amount of Rs. 3,47,03,505 refundable to the
petitioner in accordance with the provisions of the Act.
Once the order in Form No. 5 has been issued on 8th
March, 2021, the petitioner became entitled for the
amount of refund. Admittedly, the said amount was
refunded to the petitioner/adjustment towards the
demands on 22nd Oct., 2021, 10th Jan., 2022, 20th Jan.,
2022 and 30th May, 2022. No reason worth the name has
been indicated in response for the delay in refunding the
amount to which the petitioner became entitled on
passing of order in Form No. 5 way back on 8th March,
2021.
11. The Delhi High Court in the case of Ms.
Anjul (supra) while relying on one judgment of Hon'ble
Supreme Court in Union of India Through Director of
IT v. Tata Chemicals Ltd., (2014) 6 SCC 335 : (2014) 267
CTR (SC) 89 : (2014) 101 DTK (SC) 193 held that the
State having received the money without right and
having retained and used it, is bound to make the party
2
2023 SCC OnLine Raj 5600
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good, just as an individual would do under like
circumstances. The obligation to refund money received
and retained without right implies and carries with it the
right to interest.
12. Bombay High Court in the case of UPS Freight
Services (supra) while following the order in the case
of Ms. Anjul (supra) also ordered for payment of interest
as per the rate prescribed under s. 244A of the IT Act in
similar circumstances.
13. So far as the plea raised by learned counsel for
the respondents with reference to provisions of
Explanation to s. 7 of VSV Act, 2020 is concerned, the
same has been noticed for rejection only.
14. The provision of s. 7 of VSV Act, 2020 reads as
under:
"7. Any amount paid in pursuance of a
declaration made under s. 4 shall not be
refundable under any circumstances.
Explanation.--For the removal of doubts, it
is hereby clarified that where the declarant had,
before filing the declaration under sub-s. (1) of s.
4, paid any amount under the IT Act in respect of
his tax arrear which exceeds the amount payable
under s. 3, he shall be entitled to a refund of such
excess amount, but shall not be entitled to interest
on such excess amount under s. 244A of the IT
Act."
15. A bare perusal of the Explanation would reveal
that the Explanation pertains to payment of any amount
under the IT Act for the period before filing the
declaration under sub-s. (1) of s. 4 of the VSV Act, 2020
and nothing to do with the entitlement to interest for the
period after issuance of Form No. 5 indicating entitlement
of the petitioner to the amount of refund.
16. In view of the above discussion, for the delayed
payment, the petitioner is entitled to interest on the
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refund amount for the delay beyond the period of 90 days
from the date of refund i.e. 8th March, 2021.
17. Consequently, the writ petition is allowed. It is
directed that the respondents-Revenue shall make payment of
interest @ 6 per cent p.a. on the delayed refund amount w.e.f.
8th June, 2021 i.e. beyond the period of 90 days from the date
of determination of refund amount on 8th March, 2021 till the
date of actual/last payment. As the payment/adjustment has
been made on various dates, interest would be calculated on the
balance amount till each respective date. The payment of
interest be made within 08 weeks from the date of this order."
(Emphasis supplied)
The law is reiterated in plethora of cases, all interpreting the Act,
2020, which grants certain refund to the assessee.
11. In the light of the issue standing completely answered by
the Apex Court and that of the High Court of Rajasthan, this Court
need not delve deep into the matter with regard to whether the
petitioner would be entitled to interest on interest. The petition thus
deserves to succeed, on the aforesaid ground of the entitlement of
the petitioner, as is determined by the Apex Court and the High
Court of Rajasthan qua the assessee therein, who is similarly
situate as the assessee in the case at hand.
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12. For the aforesaid reasons, the following:
ORDER
(i) Writ Petition is allowed.
(ii) A Mandamus issues directing payment of interest on
delayed refund of ₹2,60,92,283/- @ 6% per annum
from 25-05-2021 up to the date of payment of refund
on 10-01-2024 and interest on the interest for the
aforesaid period.
SD/-
(M.NAGAPRASANNA)
JUDGE
bkp
CT:MJ
