1994 (10) TMI 288 - HC - VAT and Sales Tax

Summary

Issues: Delay in disposal of appeal causing damages, entitlement to interest on refund, liability of government to pay interest on interest, applicability of statutory limitations, proof of specific acts for vicarious liability, failure to act within time-limit, requirement to prove damages suffered.

In this judgment delivered by the Gujarat High Court, the petitioner sought a writ of mandamus directing the respondents to compensate by paying interest on refunds received for specific periods. The petitioner argued that the delay in disposal of the appeal entitled them to interest after the order was made. The court referred to a previous decision stating that interest on excess tax paid, retained by the government, is payable at a specified rate. The court held that the government is liable to pay interest on the interest amount due under the Act. The petitioner relied on this decision to claim interest on interest, although there was no statutory provision for it in this case.

The court acknowledged the absence of a specific provision for payment of interest on interest in the statute but emphasized that interest on refund had become due under the Act. The court stated that in the absence of a specific provision, interest could be awarded on general principles. However, in this case, the court found that the refund had become due after the appellate authority's order on the assessing authority's order. The court noted that the delay in disposal of the appeal had caused damages, but the petitioner failed to prove any specific acts or bad actions against the concerned individuals to establish vicarious liability.

Furthermore, the court referred to the Gujarat Sales Tax Act, which provided immunity to government servants acting in good faith. The court highlighted that if there was no time-limit for disposing of a pending appeal and no contravention of the relevant section, the burden of proof lay on the petitioner to demonstrate specific acts or bad actions against the individuals concerned. The court cited a Supreme Court decision to emphasize that failure to act within a time-limit did not automatically entitle a person to claim damages or interest. The court concluded that the petitioner had not succeeded in proving any specific acts of negligence or damages suffered, leading to the dismissal of the application. The court rejected the petitioner's claim, discharged the rule, and made no order as to costs.