2012 (9) TMI 909 - HC - VAT and Sales Tax

Assam Industries (Sales Tax Concession) Scheme, 1997 - eligible unit - Interest on delay refund - Held that - Refund is required to be made within 90 days and if refund is made beyond 90 days of the refund if due and if the same is delayed, simple interest at the rate of one percentum per month is payable. The impugned order denying interest is against the plain statutory provision of section 32 and the same is accordingly set aside. Claim for interest due to the petitioner be worked out in accordance with section 32 of the Act within three months from the date of this order. The petitioner may appear before the concerned Superintendent of Taxes for further proceedings on December 12, 2012. W.P.allowed.

Summary

Issues:
Challenge to order rejecting interest on refund under section 32 of the Assam General Sales Tax Act, 1993.

Analysis:
In W.P. (C) No. 5840 of 2011, the petitioner challenged an order dated August 3, 2011, seeking interest on a refund due under the Assam General Sales Tax Act, 1993. The petitioner, a chemical manufacturer, claimed interest on a refund made after a delay of over five years. The issue revolved around the interpretation of the Assam Industries (Sales Tax Concession) Scheme, 1997, which allowed for refunds to eligible units. The Superintendent of Taxes recommended payment of interest, but the Commissioner of Taxes rejected the claim citing the absence of provisions for interest in the Act. The court noted that section 32 of the Act mandates interest payment if a refund is delayed beyond 90 days, irrespective of the reason for the refund. The purpose of the provision is to compensate for the loss caused by the delay in refund, making it an equitable claim. The court referred to the case law to support the equitable nature of interest payment in such cases.

The court analyzed the statutory provision of section 32, emphasizing the requirement to make refunds within 90 days and the entitlement to simple interest at one percent per month for delays. The court rejected the interpretation that the provision only applied to refunds based on assessment orders and not scheme-related refunds. It clarified that interest under section 32 is compensatory and equitable, aiming to restore the loss caused by delayed refunds. Citing the case law, the court highlighted the equitable nature of interest payment, even in the absence of specific agreements. The court set aside the impugned order, directing the calculation of interest due to the petitioner in accordance with section 32 within three months. The petitioner was instructed to proceed before the Superintendent of Taxes for further actions on a specified date.

Therefore, the court allowed the writ petitions, emphasizing the statutory entitlement to interest on delayed refunds under section 32 of the Assam General Sales Tax Act, 1993, and the need to uphold equitable principles in such cases.