On a quiet Friday at the Andhra Pradesh High Court in Amaravati, the focus was not on a flashy dispute but on a very practical question many businesses worry about - when the government delays a tax refund, who bears the cost? The Division Bench answered it in clear terms, siding with a Visakhapatnam-based company that waited nearly two years for its money.
Background
M/s JBD Educationals Pvt. Ltd. had sought a refund of over ₹1.27 crore for the VAT period between April 2013 and March 2016. The Joint Commissioner (Audit and Refunds) approved the refund on June 19, 2020. However, the amount actually reached the company’s account only on March 31, 2022 - well beyond the 90-day limit prescribed under the Andhra Pradesh VAT law.
When the company later claimed interest for this delay, the tax department rejected it through an endorsement in June 2023. Officials argued there was no fault on their part, blaming issues in the Comprehensive Financial Management System (CFMS) and also citing the Supreme Court’s Covid-related extension of limitation periods.
Court’s Observations
The Bench of Justice Ravi Nath Tilhari and Justice Subhendu Samanta was not convinced. Reading out the statute, the judges noted that the law speaks of interest being payable until the “date of actual refund,” not the date when files are cleared or orders are passed.
“The expression used is ‘actual refund’,” the Bench observed, stressing that this means real payment to the dealer, not a symbolic or notional act. The court pointed out that even on the department’s own dates, the final approval itself was not within 90 days of the refund claim.
On the Covid argument, the judges were blunt. They said the Supreme Court’s extension of limitation was meant for litigants approaching courts, not for government authorities sitting on statutory duties. Administrative delays, system glitches, or lack of control over treasury processes, the court said, cannot dilute a clear legal mandate.
Decision
Allowing the writ petition, the High Court quashed the endorsement rejecting the interest claim. It directed the tax authorities to pay interest on the delayed refund under Section 38 of the APVAT Act read with Rule 35(8), calculated up to the date the refund was actually made. No costs were imposed.
Case Title: M/s JBD Educationals Pvt. Ltd. v. State of Andhra Pradesh & Others
Case No.: Writ Petition No. 5898 of 2024
Case Type: Writ Petition (Tax / VAT Refund & Interest)
Decision Date: 21 November 2025