LI Network
Published on: November 02, 2023 at 00:52 IST
The Bombay High Court has expressed its dissatisfaction with the common practice of government departments using “system default” as an excuse when it comes to issuing refunds.
The court’s observation was made by a bench consisting of Justice K. R. Shriram and Justice Neela Gokhale.
The court noted that the standard explanation provided by departments is that the system, controlled by the Centralized Processing Center (CPC) in Bangalore, is encountering issues, leading to delays in releasing amounts to taxpayers.
The court emphasized that, by law, interest is payable until the refund date, and it is essential for the department to realize that this interest payment involves public money, which burdens the exchequer unnecessarily.
The Bombay High Court expressed its hope that the Finance Ministry would take this issue seriously and strive to resolve the problems faced by taxpayers and Income Tax Officers.
The court recommended that a copy of its order be sent to the Prime Minister’s Office, the Finance Minister of India, the Law Minister of India, the Central Board of Direct Taxes, and the Attorney General for India to bring the matter to their attention and take necessary actions.
The case in question pertains to a refund amount of Rs. 19,69,46,789 for the Assessment Year 2020–21. The respondent had contacted the CPC to expedite the refund details as determined in the ITBA portal, allowing the final manual order to be issued.
However, due to the system’s issues, which fall under the control of the CPC in Bangalore, the refund approved through a web service rectification order passed on July 29, 2023, had not been captured. Until this issue is resolved, the case’s proceedings could not move forward.
The court stated that if the department had resolved its technical issues, unrelated to any substantial legal matter, the case would not have ended up in litigation. The court highlighted that such proceedings consume valuable judicial time, which is already burdened with a heavy caseload, and result in delays in handling other cases and increased backlogs.
The Bombay High Court directed the department, either directly or through the CPC, to ensure that the refund amount is credited to the petitioner’s account by November 4, 2023, along with interest up to the payment date as required by law.
Case Title: Matrix Publicities and Media India Pvt. Ltd. Versus Deputy Commissioner of Income Tax Circle- 16(1), Mumbai & Ors.