2000 (2) TMI 796 - HC - VAT and Sales Tax

Summary

Issues:
1. Delay in refund of excess tax paid by the petitioner.
2. Claim of interest on the refundable amount.
3. Validity of objections raised by the opposite parties regarding the refund application.
4. Interpretation of statutory provisions of sections 14 and 14-C of the Orissa Sales Tax Act, 1947.
5. Application of rule 36 of the Orissa Sales Tax Rules, 1947 in the case.

Delay in Refund of Excess Tax Paid:
The petitioner, a registered dealer, was assessed to tax for a quarter and found eligible for a refund of Rs. 8,863. Despite multiple requests, the Sales Tax Officer (STO) delayed the refund process. The petitioner's representation highlighted the delay, leading to the issuance of the refund order in 1993, without the interest due under section 14-C of the Act. The petitioner's writ petition challenged the denial of interest due to the delay in refund.

Claim of Interest on Refundable Amount:
The petitioner sought interest on the refundable amount as per section 14-C, which mandates interest payment if the refund is not processed within ninety days of the application. The opposite parties contended that the delay was justified due to defects in the refund application and the need for verification of payments made at various circles. However, the court held that the dealer is entitled to interest if the conditions of section 14 are met, irrespective of delays caused by the department.

Validity of Objections Raised:
The opposite parties raised objections regarding the refund application's defects and the mode of tax payments made by the petitioner at different check-gates. The court noted that the objections were unfounded as the total tax paid was credited by the STO after verification. The court emphasized that if payments were accepted during assessment, no further evidence was necessary for refund processing.

Interpretation of Statutory Provisions:
Sections 14 and 14-C of the Act govern refunds and interest payments. The court clarified that a dealer must apply for a refund within the prescribed period and manner. Interest accrues if the refund is delayed beyond ninety days from the application date. The court emphasized that interest is mandatory once the conditions of section 14 are satisfied, and delays by the department do not absolve them from paying interest.

Application of Rule 36:
Rule 36 of the Rules pertains to tax payments at check-gates and the need for certificates from Sales Tax Officers. The court highlighted that if payments were credited during assessment based on receipts, no further evidence was required for refund processing. The court rejected the contention that interest was not payable due to payment modes, emphasizing the dealer's entitlement to interest as per statutory provisions.

Conclusion:
The court allowed the writ petition, directing the STO to grant interest on the refund amount as per statutory rates within two months. The judgment emphasized the dealer's right to interest on delayed refunds and rejected objections raised by the opposite parties regarding the refund application and payment modes.