Tax refunds: PAC calls AG to explain contradictory opinions

NEW DELHI: A Parliamentary committee today decided to call Attorney General G E Vahanvati to explain two contradictory opinions given by him on a CAG report which said the expenditure on interest payment on tax refunds was in contravention of Constitutional provisions.

During an internal discussion today, the Public Accounts Committee ( PAC) decided to call Vahanvati to explain the two "mutually contradictory opinions" rendered by him on the CAG report, sources said.

In his first opinion, the AG had supported CAG's view that expenditure on interest payment on refund of taxes was in contravention of Constitutional provisions.

But in his revised opinion, he said the Central Board of Direct Taxes (CBDT) was not at fault.

The PAC also decided to call Revenue Secretary Sumit Bose to explain the Finance Ministry's stand.

PAC had taken up certain paragraphs of the CAG report on 'Expenditure incurred on interest on refunds of taxes' for examination.

The CAG had pointed that expenditure on interest on refunds of taxes amounting to Rs 10,499 crore was incurred by the CBDT in 2010-11 without Parliament's authorisation.

"A total expenditure of Rs 37,365 crore on interest payments was incurred over the preceding five years without obtaining the approval of Parliament," the PAC note on the issue said.

It said since audit was of the view that the expenditure on interest payment on refund of taxes was in contravention of Article 114 (3) of the Constitution, the views of the Law Ministry were sought. The Ministry, however, referred the matter to the AG.

Vahanvati in his opinion said that the "objection taken by the CAG with regard to the practice followed in relation to payment of interest on refund of excess tax is completely justified".