2014 (9) TMI 637 - HC - VAT and Sales Tax

Denial of refund claim - returns were assessed under Section 38 - Held that - As per Annexure-J dated 01/06/2014, the petitioner is entitled to the amount by way of refund. It is also not in dispute that till date that amount has not been refunded to the petitioner. The Division Bench of the Andhra Pradesh High Court in the aforesaid decision, has categorically stated that withholding of refund to an assessee is permissible only when other proceeding under the Act is pending or where the assessing authority is of the opinion that the grant of refund is likely to adversely affect the revenue. Where none of the aforesaid conditions or circumstances are existing in the instant case, then refusal to refund is illegal. The reason that revisional orders are awaited from the Commissioner of Commercial Tax is not a relevant ground or reason to withhold the refund, particularly when it is not shown that the Commissioner of Commercial Tax has already initiated revisional proceedings under the Act - authorities are directed to refund ₹ 1,06,89,301/- along with interest at 6% p.a. in accordance with Section 50 of the Act - Following decision of Sriram Transport Finance Company Ltd. Versus Commercial Tax Officer and Another 2000 (7) TMI 947 - ANDHRA PRADESH HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Refund of excess tax paid by the petitioner for the assessment period 2006-07 and 2007-08.
2. Entitlement to interest on the refunded amount under Section 50 of the Karnataka Value Added Tax Act, 2003.
3. Delay in refunding the excess amount to the petitioner.
4. Interpretation of relevant legal provisions and precedents regarding the obligation to refund excess tax.

Issue 1: Refund of Excess Tax Paid
The petitioner, a registered dealer under the Karnataka Value Added Tax Act and the Central Sales Tax Act, filed returns for the assessment period 2006-07 and 2007-08. After re-assessment, a notice of excess payment was issued, entitling the petitioner to a refund of Rs. 1,06,89,301. The petitioner sought a direction for the refund as the amount had not been refunded since June 2012.

Issue 2: Interest Entitlement
The petitioner also sought interest on the refunded amount at the rate of 6% per annum as per Section 50 of the Act. The petitioner's counsel referenced a decision from the Andhra Pradesh High Court, emphasizing the duty of the authorities to refund the amount within a reasonable period to avoid violating constitutional provisions.

Issue 3: Delay in Refund
The petitioner's grievance was the delay in refunding the amount, prompting the court to examine the reasons for withholding the refund. The court noted that as per the notice dated 01/06/2014, the petitioner was entitled to the refund, and the amount had not been refunded till the date of the judgment.

Issue 4: Legal Interpretation
In analyzing the legal aspects, the court referred to the Andhra Pradesh High Court's decision, stating that withholding a refund is permissible only under specific circumstances, such as pending proceedings or potential adverse revenue impact. As no such conditions existed in this case, the court directed the authorities to refund the amount along with interest within two weeks from the date of the order, citing Section 50 of the Act.

In conclusion, the court disposed of the writ petitions, emphasizing the obligation to refund the excess tax amount promptly in compliance with legal provisions and established precedents.