2014 (10) TMI 933 - HC - VAT and Sales Tax

Interest on delayed Refund - purchase tax paid on natural gas - Held that - Sub-section (1) thereof provides that where refund of any amount becomes due to the dealer by virtue of an order of assessment u/s 41, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest at the specified rates - the Value Added Tax Act which is substituted by the Sales Tax Act also has a similar provision for statutory interest - the respondents cannot avoid the liability of paying the refund with statutory interest - petition allowed - decided in favor of petitioner.

Summary

Issues:
- Delayed refund of taxes and payment of interest

Analysis:
The petitioner, engaged in manufacturing, sought direction for the payment of interest on delayed tax refund. The assessing authority accepted the petitioner's contention regarding purchase tax on natural gas for the assessment year 2002-2003. Despite an order granting the refund of a substantial amount, it was not paid for nearly five years until released in 2014. The petitioner argued that statutory interest under section 54 of the Gujarat Sales Tax Act, 1969 should be paid due to the delay.

The petitioner's counsel cited a previous court decision directing payment of interest on a withheld refund, emphasizing the statutory provision for interest on delayed refunds. The department, represented by the AGP, contended that the petition should not be entertained due to the availability of alternative remedies.

The court acknowledged the admitted facts that the assessment was finalized in 2009, granting a refund that was not released until 2014. Referring to section 54 of the Gujarat Sales Tax Act, 1969, the court highlighted the provision for interest on delayed refunds. Despite the availability of alternative remedies, the court held that the respondents were liable to pay the refund with statutory interest, emphasizing the clear and stark facts of the case.

In the final judgment, the court directed the respondents to pay statutory interest to the petitioner on the delayed refund by a specified date, thereby disposing of the petition. The decision underscored the obligation of the respondents to fulfill the payment with interest as per the statutory provisions, despite the availability of alternative remedies.