2008 (8) TMI 839 - HC - VAT and Sales Tax

Interest on refund of sales tax - Held that - We hardly find any justification for invoking the high prerogative jurisdiction. As soon as a proper application for refund was made by the petitioner, which was received by the authority on August 20, 2007, the refund has been made to the petitioner on September 6, 2007. If any delay occurred in payment of refund, it was, firstly because, no application for refund was made as soon as amount became refundable and then the application was made in form XX initially was incomplete and suffered from diverse deficiencies. W.P.dismissed.

Summary

Issues:
Claim for interest on refund of sales tax under Bihar Finance Act, 1981.

Analysis:
The petitioner filed a writ petition seeking interest on the refund of sales tax. The petitioner's claim was based on Section 43 of the Bihar Finance Act, 1981, which entitled them to interest if the refund was not made within six months of entitlement. The Senior Counsel argued that the petitioner was entitled to interest on delayed refund due to the delay in processing the refund.

The Court referred to Sections 42 and 43 of the Bihar Finance Act, 1981, which outlined the provisions for refunds and interest. Section 43 specifically mentioned that if the refund was not made within six months from the date of application, interest at the rate of nine percent per annum would be applicable.

Moreover, Rule 34 of the Bihar Sales Tax Rules, 1983 detailed the procedure for refund under Section 42, specifying different authorities based on the amount to be refunded. The rule also outlined the process for issuing notices and making refund applications, emphasizing the need for completeness and accuracy in the application.

During the hearing, the Senior Counsel clarified that no notice in the prescribed form was issued to the petitioner, indicating a delay in the refund process. However, the Government counsel disputed this claim, presenting evidence that a notice was indeed issued to the petitioner, and the subsequent application for refund was initially rejected due to deficiencies.

The Court noted the conflicting arguments and evidence presented by both parties. Ultimately, the Court found that a proper application for refund was made by the petitioner, which was received by the authority within the prescribed timeline. The delay in the refund process was attributed to the initial incomplete application and subsequent deficiencies, rather than any fault on the part of the authority.

Consequently, the Court dismissed the writ petition, stating that there was no justification for invoking the high prerogative jurisdiction as the refund was made to the petitioner within a reasonable timeframe once a proper application was submitted and processed.