2006 (11) TMI 555 - HC - VAT and Sales Tax

Issues Involved:
1. Rejection of interest payment claim under the Central Sales Tax Act, 1956.
2. Rejection of interest payment claim under the Orissa Sales Tax Act, 1947.
3. Validity of the interim order for refund with interest.
4. Applicability of judicial precedents cited by the petitioner.

Detailed Analysis:

1. Rejection of Interest Payment Claim under the Central Sales Tax Act, 1956:
The petitioner, a public limited company engaged in cement manufacturing, challenged the Sales Tax Officer's order dated June 21, 2001, which rejected their claim for interest payment for the year 1994-95 under the Central Sales Tax Act, 1956. The court found that the rejection was based on sound reasons, as the refund did not arise from the High Court's order but from the first appellate authority's order. The court stated, "the refund which was granted to the petitioner does not arise out of the order of the High Court, but from the order of the first appellate authority."

2. Rejection of Interest Payment Claim under the Orissa Sales Tax Act, 1947:
Similarly, the petitioner's claim for interest under the Orissa Sales Tax Act, 1947, was also rejected. The Sales Tax Officer argued that since the refund was granted pursuant to Section 14 of the OST Act within 90 days, no interest was payable. The court upheld this reasoning, stating, "refund was granted pursuant to section 14 of the OST Act and the said refund having been granted within a period of 90 days, no interest can be granted to the petitioner."

3. Validity of the Interim Order for Refund with Interest:
The court examined whether the interim order for refund with interest, issued on March 13, 1997, was still valid. The interim order stated, "in case the petitioner succeeds, it will be entitled to refund and the refund will be effected with interest in the prescribed manner from the date of deposit notwithstanding any formal application ultimately." However, since the writ petition was ultimately dismissed, the court ruled that the interim order lost its force. The court emphasized, "It is well-settled that an interim order merges with the final and it cannot survive after the final order is passed."

4. Applicability of Judicial Precedents Cited by the Petitioner:
The petitioner cited several judicial precedents to support their claim for interest:

- Tata Refractories Ltd. v. Sales Tax Officer: The court distinguished this case, noting that the direction for interest was given at the final disposal of the writ petition, unlike the present case where the writ petition was dismissed. The court stated, "the facts in the present case and the facts in the case of Tata Refractories Ltd... stand on totally different footing."

- Union of India v. Justice S.S. Sandhawalia (Retd.): The court found this case irrelevant as it dealt with service benefits and not tax refunds. The court noted, "the direction to refund with interest to the petitioner was conditioned on the success of the writ petition, but the writ petitioner had not succeeded."

- Sandvik Asia Ltd. v. Commissioner of Income-tax: The court acknowledged the principles laid down in this case but noted that the statutory provisions for interest on refunds were followed in the present case. The court stated, "the principles which have been laid down in the case of Sandvik Asia Ltd... have been followed in this case."

- IDL Industries Ltd. v. State of Orissa: The court found this Full Bench judgment irrelevant as it dealt with reassessment and not the current issue of interest on refunds.

Ultimately, the court dismissed both writ petitions, concluding that there was no error in the Revenue's order dated June 21, 2001. The court stated, "For the reasons discussed above, this court cannot accept the contention of the learned counsel for the petitioner and does not find any error in the order dated June 21, 2001 passed by the Revenue." Both petitions were dismissed without any order as to costs.

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