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We win Supreme Court Judgement regarding interest on VAT refund!
Supreme Court Judgment No. 2567/2560
According to the case PLAINTIFF (Taxpayer) filed a lawsuit against Revenue Department (“RD”), the Supreme Court provided the final judgment divided into the following 3 main legal issues:
Issue 1 : Whether there was any dispute regarding rights and obligation between PLAINTIFF and RD or not
The Supreme Court considered that an interest under Section 4 Decem of Revenue Code (“RC”) was a legal fruit of VAT that PLAINTIFF overpaid. The consideration of the interest shall pay attention to Section 4 Decem of RC and Ministerial Regulation No. 161 (B.E. 2526) (“MR No. 161”). The Supreme Court interpreted that Section 4 Decem required RD to provide the interest for Plaintiff. That RD returned VAT refund but refused to return the interest to PLAINTIFF resulted in the dispute regarding rights and obligation between PLAINTIFF and RD.
Even though PLAINTIFF filed the lawsuit while the legal division of RD was considering this matter, the filing lawsuit occurred after the dispute regarding rights and obligation of the interest had arisen. Therefore, there was the dispute taking place between PLAINTIFF and RD. PLAINTIFF was entitled to file the lawsuit before the Court. This appeal issue of PLAINTIFF was legitimate.
Issue 2: Whether PLAINTIFF was entitled to obtain the interest of VAT refund or not
According to Section 4 Decem of RD and Clause 1(2) and Clause 2 of MR No. 161, the Supreme Court considered that an interest is started to calculate as from the following date when the 3 months since PLAINTIFF filed application for tax refund was reached until the date when RD signed on the notice for returning tax refund. Therefore, the assessment officer of RD shall calculate the interest as from the following date when the 3 months of each filed application for tax refund was reached until the date when RD signed on the notice for returning VAT refund to PLAINTIFF. Also, the Supreme Court reinforced that the interest calculation was arisen as of the following date of 3 months when the application for tax refund was filed, but not as of the following date of 3 months when PLAINTIFF completely submitted documents related to VAT refund to RD. The reason was that the request of document submission for the assessment officer’s examination (Paragraph 3 of Clause 2 of MR No. 161) just resulted in the suspension of the interest calculation as from the last date when the assessment officer ordered (Paragraph 4 of Clause 2 of MR No.161).
Moreover, the period between the date when the assessment officer issued the order for requesting further documents and the date when PLAINTIFF received such order was less than 15 days under Paragraph 2 of Clause 2 of MR No. 161. RD, therefore, could not suspend the interest calculation. PLAINTIFF was still entitled to receive the interest until the date when RD signed on the notice for returning tax refund.
Issue 3 : Whether PLAINTIFF was entitled to obtain an interest rate 7.5% of the principal, which was the interest of VAT refund, as from the date when RD signed on the order of VAT refund until the date when the payment would be completely made by RD
PLAINTIFF appealed that RD made a wrongful act to PLAINTIFF because RD did not pay PLAINTIFF for VAT refund within a reasonable period. It caused damage to PLAINTIFF. Additionally, as Paragraph 2 of Clause 1 of MR No. 161 provided that the interest could be calculated until the date when RD signed on the notice for requesting tax refund, MR No. 161 did not specify how to calculate the interest since then. The Supreme Court interpreted that after RD signed on the notice for requesting VAT refund to PLAINTIFF, RD shall not pay PLAINTIFF for the interest for VAT refund anymore. The period of the interest calculation for VAT refund was stopped when RD signed on the notice for requesting VAT refund. So, there was no compound interest during the RD’s default because the interest for VAT refund had already been stopped.
When PLAINTIFF suffered from damage on the RD’s failure to comply with rules and conditions of Section 4 Decem of RC and MR. No. 161 within the reasonable period, PLAINTIFF deserved to receive compensation for the damage. RD had already paid PLAINTIFF the interest for ******* Baht; therefore, PLAINTIFF was awarded partial compensation by RD. The Supreme Court considered RD to compensate PLAINTIFF for damages by paying the interest rate of 7.5% of the unpaid principal, as from the following date when RD signed on the notice for returning VAT refund until the date when RD would finish paying.
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