2007 (11) TMI 575 - HC - VAT and Sales Tax

Sales tax on palmolive oil - refund claim petition - interest on non late payment of refund - Held that - . Section 33F(2) lays down that when refund is withheld under the provisions of section 33C, as was done in the present case, the State Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceedings for the period commencing after six months from the date of order referred in section 33C of the Act, to the date the refund was granted. It becomes clear that as a result of further appeal, the point of reference would be the order made under section 33C of the Act. So, the interest, in our view, would be payable from a date after six months of the order having been passed under section 33C of the Act, withholding the refund. In the present case, the order withholding the interest was passed on February 4, 1998. W.P. allowed and the petitioner is held entitled to interest at the rate of 12 per cent per annum on ₹ 1,86,811 (Rupees one lakh eighty six thousand eight hundred and eleven only) from August 4, 1998 till January 18, 2006.

Summary

Issues:
- Assessment of sales tax on palmolive oil
- Appeal against assessment order
- Revision of orders by the revisional authority
- Refund claim and interest on delayed refunds
- Interpretation of sections 33B, 33C, 33E, and 33F of the Act

Assessment of Sales Tax on Palmolive Oil:
The petitioner was assessed for sales tax on palmolive oil, initially at eight percent and later at two percent, under the Andhra Pradesh General Sales Tax Act. An appeal was filed questioning the assessment order, leading to the appellate authority directing tax levy at two percent based on a Supreme Court judgment. However, the revisional authority revised the orders, which were further challenged before the Sales Tax Appellate Tribunal. The Tribunal allowed the appeal, confirming the tax levy at two percent on non-refined oil under a specific entry in the First Schedule.

Refund Claim and Interest on Delayed Refunds:
Following the Tribunal's decision, the petitioner sought a refund of the disputed tax amount. The respondent initially withheld the refund citing pending revision, but eventually, after the Tribunal's decision, issued an order for refund. The petitioner claimed interest on the delayed refund amount based on sections 33E and 33F of the Act, which outline the entitlement to interest if refunds are not granted within six months. The petitioner requested interest from the date the refund was due until the actual payment date.

Interpretation of Sections 33B, 33C, 33E, and 33F of the Act:
The court analyzed sections 33B, 33C, 33E, and 33F of the Act concerning refunds and interest on delayed refunds. Section 33B entitles the assessee to refund without a claim upon appeal orders. Section 33C allows withholding refunds in certain cases. Sections 33E and 33F specify interest entitlement for delayed refunds, with section 33F(2) particularly addressing interest when refunds are withheld under section 33C. The court concluded that interest should be payable from six months after the order withholding the refund until the actual payment date, as per the provisions of the Act.

The court allowed the writ petition, holding the petitioner entitled to interest at 12 percent per annum on the refund amount from a specified date until the payment date. The decision emphasized the application of relevant sections of the Act in determining refund entitlement and interest on delayed refunds, ensuring the petitioner's rights were upheld in the matter.