2009 (2) TMI 752 - HC - VAT and Sales Tax

Refund application rejected on the ground that the same is illegal and violative of the provisions contained in the Orissa Sales Tax Act 1947 - Held that - STO has rejected the petitioner s applications dated May 2 1997 for refund on July 12 2001 i.e. after the assessment attained finality on June 15 2001 only to avoid payment of interest which accrued in favour of the petitioner for the period he kept the refund applications pending after expiry of ninety days from the date of filing of refund applications without any authority of law. At least the assessing officer should have released the amount of refund along with interest immediately after the assessment attained finality on June 15 2001 instead of rejecting petitioner s applications for refund on July 12 2001 and asking the petitioner to file fresh applications for refund. Thus the dealer is entitled to interest under section 14C of the OST Act from the date of filing of the refund applications i.e. May 2 1997 till the date of payment. In favour of assessee.

Summary

Issues:
1. Rejection of refund applications by Sales Tax Officer after assessments attained finality.
2. Entitlement to interest on the refund amount.

Issue 1:
The case involved two writ petitions against the Sales Tax Officer's rejection of refund applications for the years 1984-85 and 1985-86. The petitioner, a public limited company, had entered into a contract with another company for construction work and filed refund applications after reassessment orders granting refunds. The Sales Tax Officer rejected the applications on the ground that they were sub judice before the High Court. The main contention was whether the rejection of refund applications after assessments attained finality was justified. The court analyzed the provisions of the Orissa Sales Tax Act and Rules, emphasizing the need for timely disposal of refund applications. It was found that the Sales Tax Officer had kept the applications pending for over four years without any legal basis. The court concluded that the rejection of refund applications after assessments were finalized was not sustainable and ordered the release of the refund amount.

Issue 2:
The second issue revolved around the entitlement to interest on the refund amount. The court referred to relevant legal precedents emphasizing the importance of timely processing of refund applications and the payment of interest if there are delays. It was noted that the Sales Tax Officer rejected the refund applications to avoid paying interest that had accrued in favor of the petitioner. The court held that the dealer was entitled to interest under the Orissa Sales Tax Act from the date of filing the refund applications until the date of payment. The court ordered the Sales Tax Officer to release the refund amount along with interest within a specified timeframe. The court cited previous cases where interest was awarded in similar situations, highlighting the importance of avoiding unnecessary delays in processing refund claims.

In conclusion, the High Court of Orissa quashed the Sales Tax Officer's orders rejecting the refund applications, directing the release of the refund amounts with interest to the petitioner. The court emphasized the legal obligation to process refund applications in a timely manner and upheld the petitioner's right to interest on the refund amount.