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CA Final · Indirect Tax Laws · Refunds

A refund of Rs 4,00,000 was sanctioned to Meenakshi Industries, but the credit failed because the bank account details in the application were incorrect. The applicant took 12 days to furnish and validate the correct bank details. For interest under section 56 read with rule 94, what is the treatment of these 12 days?

The 12 days are excluded from the period of delay. Rule 94(2)(b) excludes any time the applicant takes to furnish correct bank details or validate them when the sanctioned refund could not be credited to the account originally given, so interest does not run for that time.

  1. AThey are included in the period of delay because the department sanctioned the refund on time
  2. BThey are excluded from the period of delay under rule 94(2)(b)Correct
  3. COnly the first 7 days are excluded
  4. DThe entire interest claim lapses

Explanation

Rule 94(2)(b) excludes any time taken by the applicant to furnish correct bank account details or validate them where the sanctioned refund could not be credited to the account given. All 12 days are therefore excluded, with no day-limit. Including them (option A) ignores the rule.

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