2007 (9) TMI 575 - HC - VAT and Sales Tax

Right to payment of refund as well as payment of interest on delayed refund - Held that - In light of the above mentioned we allow these petitions being squarely covered by the judgments of this court in the cases of Ratti Woollen Mills 2007 (2) TMI 587 - PUNJAB AND HARYANA HIGH COURT and Escotel Mobile Communication Ltd. 2007 (7) TMI 581 - PUNJAB AND HARYANA HIGH COURT . The impugned order dated June 7 2007 passed by the Excise and Taxation Commissioner Haryana is set aside. The respondents are directed to refund 5, 38, 802 in respect of assessment year 1999-2000 along with interest to the assessee-petitioner. The assessee-petitioner is further held entitled to interest on delayed payment of refund of 2, 54, 782 in respect of assessment year 1998-99. The interest shall be calculated at the rate of 12 per cent per annum in respect of delay for the first month of delay and at the rate of 18 per cent per annum in respect of delay caused for the subsequent months. The needful shall be done within a period of one month from the date of receipt of a certified copy of this order. The assessee-petitioner is also held entitled to payment of costs of Rs. ten thousand in each of the petition

Summary

Issues:
- Right to payment of refund and interest on delayed refund under Article 226 of the Constitution
- Legality of withholding refund under Section 44 of the Act
- Entitlement to interest on delayed refund for assessment years 1999-2000 and 1998-99

Analysis:
- The petitioner, a registered dealer, sought refund and interest on delayed refund for assessment years 1999-2000 and 1998-99. The Revisional Authority revised the assessment order, raising additional demands. Appeals were filed, leading to orders in favor of the petitioner. However, refund applications were not processed timely, leading to the petitioner seeking relief through writ petitions (P1-P8).
- The legality of withholding refunds under Section 44 of the Act was challenged. The court analyzed the provision and found that withholding refunds to protect revenue interests is permissible only until finalization of proceedings. The court noted the turnover and refund amounts for multiple years, concluding that refunding the amount in question would not prejudice state interests. The order withholding the refund was deemed invalid and quashed (P9).
- The entitlement to interest on delayed refunds was established based on previous judgments. Citing relevant case law, the court determined the petitioner's entitlement to interest on delayed refunds for both assessment years. The interest rates were specified, and the respondents were directed to refund the amounts along with the interest within a specified timeframe. Additionally, the petitioner was awarded costs for each petition (P10).