2009 (10) TMI 869 - HC - VAT and Sales Tax

Summary

Issues:
Claim for interest on delayed refund of excess input tax paid by petitioner-company.

Analysis:
The petitioner sought a writ to quash endorsements refusing to pay interest on delayed refund. The petitioner made purchases from a company and paid input tax at 12.5%, later selling the goods and being liable for 4% tax. The excess input tax paid was refunded by the respondents in 2008, but interest on delayed refund was denied, leading to the writ petitions. The key dispute was whether the respondents were obligated to pay interest at 6% per annum on the delayed refund to the petitioner. The respondents had collected 12.5% input tax from the seller but were only entitled to retain 4% tax and consequent interest on delayed payment, penalty, and refund the excess input tax with interest as per the relevant statutes. The court allowed the writ petitions, quashed the endorsements, and directed the respondents to calculate and pay the interest on refunded input tax promptly, not later than six weeks from the date of the order.