2006 (2) TMI 623 - HC - VAT and Sales Tax

Summary

Issues:
1. Entitlement to refund of excess tax paid under U.P. Trade Tax Act.
2. Entitlement to interest on the refunded amount under Section 29(2) of the Act.

Entitlement to Refund of Excess Tax Paid:
The case involved a Private Limited Company challenging a tax assessment for the year 1997-98 under the U.P. Trade Tax Act. The company claimed it did not conduct business within the State of U.P. and thus should not be liable for the tax imposed. The assessing authority levied a tax of Rs. 26,40,470, which the company contested. The Joint Commissioner (Appeals) allowed the appeal and remanded the matter back to the assessing authority. Despite the coercive recovery of the tax amount, the company sought a refund following the appellate order. The Tribunal initially rejected the refund application. However, the High Court, in line with previous decisions, held that any amount paid in excess of the admitted tax liability during the appeal process is refundable. The Court referred to the principle of restitution and directed the assessing authority to refund the excess amount recovered during the appeal period, excluding any admitted tax liability, within seven days.

Entitlement to Interest on Refunded Amount:
The second issue raised was the entitlement to interest on the refunded amount under Section 29(2) of the U.P. Trade Tax Act. The company argued for interest at a rate of 12% from the date the appellate authority's order was received by the assessing authority. The Court, following the provisions of the Act, directed the assessing authority to pay interest in accordance with Section 29 of the Act. This decision was based on the clear duty imposed on the assessing authority to refund any amount paid in excess of the tax due, including the payment of interest as per the statutory provisions.

In conclusion, the High Court allowed the revision, set aside the Tribunal's order, and directed the assessing authority to refund the excess tax amount recovered during the appeal process, excluding any admitted tax liability, and to pay interest in accordance with Section 29 of the U.P. Trade Tax Act.