2019 (2) TMI 2060 - HC - VAT and Sales Tax

Doctrine of merger - Seeking a direction to the respondents to pay interest at the rate of 9% per annum from August, 2006 till the date of its actual refund on the principal amount - HELD THAT - It is not in dispute that the controversy involved in the present case is no longer res integra, inasmuch as the same stands decided by the above referred decision of this court in the case of M/s Syngenta Crop Protection Pvt. Ltd. v. State of Gujarat 2018 (4) TMI 1669 - GUJARAT HIGH COURT . In the said case this court, relied upon an earlier decision of this court in the case of State of Gujarat v. Doshi Printing Press 2015 (3) TMI 211 - GUJARAT HIGH COURT wherein the court turned down the contention that while giving effect to section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first appellate authority or thereafter, the second appellate authority or even third appellate authority, as the case may be. The court held that the interpretation canvassed by the revenue of section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of the doctrine of merger which is a well accepted doctrine incorporated in the system of administration of justice. The refund claim of the assessee, therefore, cannot be stated to have arisen from an order other than the order of assessment. The court further held that the amounts were recovered from the petitioners only in the month of February 2010, that is, long after the VAT Act was brought in force and that the petitioner cannot seek interest on the refund at the rate prescribed under the repealed Gujarat Sales Tax Act merely because the amount involved was in relation to a period when the Gujarat Sales Tax Act was in force. To that extent, the petitioner s contention was negatived. The respondents are directed to forthwith pay interest to the petitioner at the rate of 6% per annum from August, 2006 till the date of actual refund on the principal amount of Rs.1,28,63,365/-, and not later than four weeks from the date of receipt of a copy of this judgment - Petition allowed.

Summary

Issues involved: Petition seeking direction for interest payment on refund amount under Gujarat Sales Tax Act, 1969.

Analysis:
1. Interest on delayed refund: The petitioner sought interest at 9% per annum on the principal amount of Rs.1,28,63,365/- from August 2006 till the date of actual refund. The petitioner argued that as per section 54 of the Act, interest is payable on the refund amount from the date of assessment order. Reference was made to a previous decision by the court to support this claim.

2. Interpretation of refund claim: The respondents contended that the refund claim arose from an order of the appellate authority, not the assessment order, falling under a specific clause of section 54(1) of the Act. They argued that interest should not be paid from the date of the assessment order, as claimed by the petitioner.

3. Legal precedent and applicability: The court referred to a previous judgment where it was held that the refund claim arises from the corrected assessment made by the appellate authority, not from a separate order. The court emphasized the doctrine of merger and the prevailing corrected assessment as the basis for determining the entitlement to interest on the refund amount.

4. Applicability of interest rate: Considering the enactment of the Gujarat Value Added Tax Act, 2003, the court determined that the petitioner was entitled to interest at a rate of 6% per annum, not 9%, as per the provisions of the new Act. The court clarified the rate applicable based on the timeline of the reassessment order and the claim for interest.

5. Final decision and direction: Despite the pending adjudication of a related matter before the Supreme Court, the court held that the present controversy was settled by its previous judgment. The court allowed the petition, directing the respondents to pay interest to the petitioner at the rate of 6% per annum from August 2006 until the actual refund date on the specified principal amount, within four weeks of the judgment.

This detailed analysis outlines the key arguments, legal interpretations, precedents, and the final decision of the court regarding the petition for interest payment on the refund amount under the Gujarat Sales Tax Act, 1969.