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2008 (3) TMI 644 - HC - VAT and Sales TaxInterest on refund - Held that - An assessee is entitled to interest on refund at the prescribed rate, if a refund is not made within 90 days from the refund order. Section 44B is not at all attracted to the facts of the present case. The petitioner is therefore, entitled for interest on delayed refund for a period from July 1, 1997 till the date of actual payment, i.e., February 6, 2004. During this period, the prescribed rate of interest was nine per cent per annum and hence, we direct the respondents to pay simple interest at the rate of nine per cent per annum on amount of ₹ 79,00,000 for the period from July 1, 1997 to February 6, 2004.
Issues Involved:
1. Grant of interest to the petitioner under section 44A of the Bombay Sales Tax Act, 1959. 2. Preliminary objection raised by the respondent regarding the maintainability of the petition. 3. Interpretation and application of sections 44A and 44B of the Bombay Sales Tax Act, 1959 regarding interest on delayed refunds. Issue 1: Grant of Interest under Section 44A: The case involved a writ petition by M/s. Gharda Chemicals Ltd. seeking interest on a delayed refund under section 44A of the Bombay Sales Tax Act, 1959. Initially, a refund was granted but later set aside by a revisional order. The petitioner appealed, and the Tribunal directed the assessment officer to grant the refund. However, the petitioner mistakenly claimed interest under section 43A, which was inapplicable. The petitioner subsequently applied for interest under section 44A, but the application was rejected by the Additional Commissioner and the Commissioner of Sales Tax. The court held that the petitioner was entitled to interest on the delayed refund from July 1, 1997, to February 6, 2004, at a rate of nine percent per annum, totaling Rs. 79,00,000. Issue 2: Preliminary Objection on Maintainability: The respondent raised a preliminary objection regarding the maintainability of the petition, arguing that the petitioner should have pursued an appeal under section 56 of the Bombay Sales Tax Act instead of filing a writ petition. The court considered the petitioner's genuine doubts about the appeal's maintainability, especially due to conflicting judgments by the Tribunal on similar matters. Ultimately, the court decided to entertain the petition, keeping the question of appeal's maintainability open for future cases. Issue 3: Interpretation of Sections 44A and 44B: The court analyzed sections 44A and 44B of the Bombay Sales Tax Act, 1959 concerning interest on delayed refunds. It clarified that an assessee is entitled to interest if a refund is not made within 90 days of the refund order under section 44A. Section 44B allows the withholding of refunds in certain cases pending appeals, but it must follow a specific procedure. In this case, the court ruled that section 44B was not applicable, and the petitioner was entitled to interest on the delayed refund from July 1, 1997, to February 6, 2004, at a rate of nine percent per annum, as per section 44A. In conclusion, the court granted the petitioner interest on the delayed refund under section 44A of the Bombay Sales Tax Act, 1959, totaling Rs. 79,00,000. It overruled the respondent's objections on the petition's maintainability and provided a detailed interpretation of sections 44A and 44B regarding interest on delayed refunds, ensuring the petitioner's entitlement to the prescribed interest rate.
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