2011 (12) TMI 476 - HC - VAT and Sales Tax

Refund claim along with interest claim - penalty order passed under section 15A(1)(c) of the U.P. Trade Tax Act, 1948 seeked to be quashed - Held that - Learned counsel for the petitioner did confined his submissions on the question of penalty order under section 15(1)(c) of the Act for which he submits that he shall pursue the statutory remedy Amount which the petitioner had deposited as security was not the amount towards compounding but was for obtaining declaration form XXXI in terms of the circular issued by respondent No. 2 under section 8C(3A) of the Act. This amount of security was to be adjusted at the time of final assessment which, in fact, has been done by the assessing authority. That being the position, the Department cannot take shelter under the plea that amount of security represented the amount deposited towards compounding. The Department is liable to pay the interest under section 29(2) of the Act on the delayed payment of refund of the excess amount. W.P. allowed in part.

Summary

Issues:
1. Refund of excess tax along with interest.
2. Interpretation of security deposit as compounding money.
3. Entitlement to interest on delayed refund under section 29(2) of the Act.

Refund of Excess Tax along with Interest:
The petitioner sought a writ for a mandamus to command the Deputy Commissioner to refund a specific amount along with interest. The petitioner had deposited a sum for importing goods, and after assessment, a refund was claimed. The court directed the respondents to refund the outstanding amount within a specified time or show cause for the delay. Subsequently, a partial refund was made, but the issue of interest on the remaining amount remained unresolved. The court found in favor of the petitioner, stating that the Department was liable to pay interest on the delayed refund under section 29(2) of the Act. The court directed the respondent to calculate and pay the interest within a month.

Interpretation of Security Deposit as Compounding Money:
The petitioner argued that the security deposit made for obtaining declaration form XXXI was not towards compounding money but was in the nature of advance tax to be adjusted at final assessment. The court agreed with the petitioner, stating that the security deposit was for obtaining the declaration form as per the circular issued by the Commissioner. The court held that the Department cannot claim the security deposit represented compounding money and directed the payment of interest on the delayed refund.

Entitlement to Interest on Delayed Refund under Section 29(2) of the Act:
The petitioner contended that the security deposit was not towards compounding money but for obtaining the declaration form, hence entitled to interest on the delayed refund. The respondent justified the delay in payment of interest. The court considered the arguments and ruled in favor of the petitioner, directing the Department to calculate and pay the interest on the delayed refund within a specified timeframe. The court allowed the writ petition in part, granting relief to the petitioner.