2006 (4) TMI 484 - HC - VAT and Sales Tax

Summary

Issues:
1. Refund of deposited amount and interest under the Punjab General Sales Tax Act, 1948.

Analysis:
The petitioner, a Spanish Mercantile Company, approached the court seeking a refund of Rs. 2 lacs deposited during the appeal process and the payment of interest as per section 12(3) of the Punjab General Sales Tax Act, 1948. The petitioner had been awarded contracts for supply of electric transmission towers and faced a tax assessment resulting in a demand of Rs. 1,91,89,748, which was later reduced to a penalty of Rs. 10,000. The petitioner deposited Rs. 2 lacs for appeal hearing, which was eventually refunded after a prolonged delay, but without the statutory interest owed to the petitioner.

The petitioner argued that interest should be paid from the date the appeal was accepted and the demand set aside, citing various judgments including Saurabh Kumar & Bros. v. State of Punjab and Punjab State University Text Book Board v. State of Punjab, which supported the entitlement to interest for delayed refunds under section 12 of the Act. The petitioner also referenced the Supreme Court judgment in Philips India Ltd. v. Assistant Commissioner, Commercial Taxes, Calcutta to emphasize that interest should be paid from the date of the original assessment being set aside.

The State, represented by the learned Additional Advocate General, agreed that interest was due for the delayed refund but contended that it should be calculated from the date the assessing authority decided the remand case and settled the tax liability. However, the court found this argument inconsistent with established legal principles and directed the State to pay interest to the petitioner from the date the demand was set aside and the case was remitted back until the refund was made, in accordance with section 12 of the Act.

In conclusion, the court allowed the writ petition, granting the petitioner the refund of deposited amount along with the statutory interest, as per the provisions of the Punjab General Sales Tax Act, 1948. No costs were awarded in the judgment.