Oil and Natural Gas Corporation Limited v. Income Tax Officer, TDS Circle, Vadodara & Anr.
For these completed VSV settlements, administrative delay beyond the applicable departmental deadline attracted compensatory interest through actual refund credit.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-09-26
For these completed VSV settlements, administrative delay beyond the applicable departmental deadline attracted compensatory interest through actual refund credit. 6% interest for specified delayed-refund period; compliance deadline and default consequence
What happened
Four petitions concerned refunds totalling ₹3,49,47,687 after nil settlement under Vivad se Vishwas. Form 5 was issued on 24 May 2021, but refunds reached ONGC only on 2 March 2024. After litigation, the department paid limited interest from 1 July 2022 to 7 February 2024. ONGC sought coverage from 1 August 2021 until actual payment.
Questions before the court
- When compensatory interest should begin and end for these delayed consequential refunds.
- Whether the department could disregard its own time-bound action plan.
What each side argued
ONGC relied on the Central Action Plan 2021–22 requiring effect and refund by 31 July 2021 for qualifying Form 5 cases. Revenue invoked the section 153 timetable and resisted the longer interest period.
Why the court ruled this way
The court treated the department’s action plan and circular as material commitments governing implementation of the completed settlement. Section 153 did not justify the asserted delay in these circumstances. Relying on the compensatory character of interest recognised in Tata Chemicals, it linked relief to wrongful retention until the amount actually reached the taxpayer.
Controlling point
For these completed VSV settlements, administrative delay beyond the applicable departmental deadline attracted compensatory interest through actual refund credit.
Order and next steps
The petitions were partly allowed with interest at 6% per annum from 1 August 2021 to 2 March 2024. Compliance was directed within six weeks of receipt of the writ. Default would attract the further 9% interest consequence specified in the operative order, recoverable from erring officers.
Practical implications
Reconcile Form 5, the giving-effect order, refund sanction and bank-credit date. They are distinct events. Identify the applicable implementation direction and credit interest already paid before calculating a balance; do not rely on the judgment’s inconsistent narrative day counts.
Limits of this ruling
- This is not an automatic interest formula for every VSV settlement.
- The retained judgment contains inconsistent intermediate dates and day counts; the article follows its express operative date range.
Law and judgment source
- Direct Tax Vivad se Vishwas Act 2020
- Income-tax Act 1961, sections 153 and 244A
- CBDT Circular 03/2021
The linked PDF is a complete public court-copy document. The official court portal is provided for independent verification; a stable judgment-specific official link was not independently established. Narrative dates/day counts vary; operative dates 1 August 2021–2 March 2024 control this summary.
Source checked: 2026-09-26 · Judgment paragraphs: Paragraphs 24–37 · Later case history: not verified. Verify subsequent orders before reliance.
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