2004 (10) TMI 568 - HC - VAT and Sales Tax

Summary

Issues:
Petitioner seeking mandamus for refund with interest under Section 29 (2) of the Act.

Analysis:
The petitioner, a contractor, entered into a civil contract with Northern Railway, and tax at source was deducted. The petitioner applied under Section 7-D of the U.P. Trade Tax Act for various assessment years. The Deputy Trade Tax Commissioner found excess tax deducted and ordered adjustments for future demands. However, the excess amount was neither adjusted nor refunded. The petitioner requested a refund with interest under Section 29 (2) of the Act. After a writ petition was filed, the principal amount was refunded, but interest was withheld by the respondents.

The Standing Counsel for the petitioner argued that since there was no outstanding demand against the petitioner, a refund was due along with interest under Section 29 (2) of the Act. The delay in refund was attributed to the verification process of the tax deducted at source. The court cited a previous case where it was held that interest starts running if the refund is not made within 90 days as per Section 29 (2) of the Act. The court rejected the respondents' plea of verification as an excuse for delaying the refund.

The court directed the respondents to pay the interest calculated from the date of the refund/adjustment order within 30 days of the court's order. Additionally, the respondents were held liable to pay exemplary costs of Rs. 10,000 for withholding the refund and interest unnecessarily. The court emphasized that since the principal amount was refunded only after the writ petition was filed, the respondents were obligated to pay the interest and costs within the specified period. The writ petition was allowed in part, ruling in favor of the petitioner for the refund with interest and costs.