Stamp Act | Interest Must Be Paid On Excess Duty Illegally Detained By Government: Allahabad High Court

The Allahabad High Court has 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.

In September 2013, an order of refund of Rs.5,35,454/- was passed in favor 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 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.

Counsel for the revenue argued that even if the authorities delayed the payment of refund, no interest was payable on it.

Relying on Article 265 of the Constitution of India, which provides that no tax can be collected without authority of law, Justice Shekhar B. Saraf held

“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. There is no requirement of any specific provision for the payment of interest in such circumstances.”

Accordingly, the Court directed the authorities to pay interest @ 5% from one month after the order of refund was passed in 2013 till December 2023 when the refund was actually paid.

Case Title: Vinod Kumari v. State Of Up And 2 Others 2024 LiveLaw (AB) 232 [WRIT - C No. - 5832 of 2024]

Case Citation: 2024 LiveLaw (AB) 232

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