2003 (9) TMI 722 - HC - VAT and Sales Tax

Summary

Issues:
1. Petitioner seeks interest on delayed tax refund.
2. Petitioner challenges the constitutionality of a specific rule.
3. Discrepancy in tax payment and refund process.

Analysis:

Issue 1:
The petitioner sought interest on a delayed tax refund amounting to Rs. 17,019 deposited from June 1, 1986, to December 16, 1986. The assessment order was challenged and set aside by the Joint Excise and Taxation Commissioner on December 31, 1990. The petitioner contended that interest should be paid on the tax amount retained by the department. However, the court held that the tax demand was not illegal, and setting aside the order did not imply the tax was illegally collected, thus denying the interest claim.

Issue 2:
The petitioner challenged the constitutionality of rule 35(1)(b) of the Haryana General Sales Tax Rules, 1975, under articles 14, 19(1)(g), and 265 of the Constitution of India. The rule did not provide for interest on the amount retained by the department, unlike provisions for interest on delayed payments by the assessee. The court rejected the argument, stating that the State's refund process differs from a taxpayer's delayed payment situation, hence not violating article 14.

Issue 3:
The court emphasized the distinction between a taxpayer's delayed payment and the State's refund of excess tax. Citing legal precedents, the court highlighted that the Government, as a distinct entity, can be treated differently in matters of payment and interest rates. Referring to Supreme Court judgments, the court concluded that the rule in question was not discriminatory or violative of constitutional provisions.

In summary, the court dismissed the petition, ruling that the rule in question was not unequal, unreasonable, or violative of constitutional articles. The parties were directed to bear their own costs, and the petition was ultimately dismissed.