2013 (2) TMI 646 - HC - VAT and Sales Tax

Interest on belated refund - Held that - The fact that the respondents have failed to remit the interest component to the petitioner, an instrumentality of the State even after this writ petition is filed sensitizing the respondents of their statutory obligations under the provisions of section 33F signals a sad state of ambivalence and dithering on the part of the respondents in issuing orders of refund along with interest statutorily mandated, a conduct to be deprecated. Thus the petitioner is entitled to interest on the amount of refund due and credited to the petitioner, i.e., ₹ 15,40,07,843 for the period July 26, 2004 to November 15, 2011.

Summary

Issues:
Claim for interest on belated refund under section 33F of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
The judgment revolves around the petitioner's claim for interest on a belated refund under section 33F of the Andhra Pradesh General Sales Tax Act, 1957. The petitioner, an instrumentality of the State, sought a refund of Rs. 15,40,07,843 for the assessment year 1998-99. Despite the completion of assessment and subsequent refund claim, delays ensued due to adjustments and arrears claimed by the respondents. The court noted the petitioner's repeated requests for refund and the eventual issuance of the refund order in 2011, leading to the petitioner's claim for interest from 2004 to 2011.

The court analyzed the provisions of section 33F, which mandate payment of simple interest at 12% per annum if the refund is not granted within six months of the order. The respondents argued that the refund was adjusted against arrears and contended that interest should be calculated from a later date. However, the court rejected this argument, emphasizing that the liability for interest arose from the date of the refund claim. The court also highlighted the invalidity of adjustments made under the Entry Tax Act, which was declared unconstitutional, rendering the adjustments non-operational.

Ultimately, the court held in favor of the petitioner, directing the respondents to compute and remit the interest amount due within a specified timeframe. The court criticized the respondents for their failure to adhere to statutory obligations and imposed costs on them for their reluctance in granting the interest component. The judgment underscores the importance of timely and accurate refund processes, emphasizing the need for compliance with statutory provisions to avoid delays and disputes in refund cases.