2016 (9) TMI 667 - HC - VAT and Sales Tax

Entitlement to interest on refund of purchase tax - Section 54(1) of the erstwhile Gujarat Sales Act,1969 - manufacture of Ayurvedic medicines - URD purchase - purchase tax - Section 15B under the erstwhile Gujarat Sales Act,1969 r/w Rule 42E of the Sales Tax Rules - gas used as fuel for manufacturing process - is the assessee entitled to interest on delayed refund of purchase tax and also interest on interest on delayed refund? - Held that - the decision of the case State of Gujarat Versus Doshi Printing Press 2015 (3) TMI 211 - GUJARAT HIGH COURT is relied upon. The assessee is entitled to interest for delayed refund of amount deposited to Governent. However, assessee not entitled to interest on interest for delayed refund. the decision of the cases Sandvik Asia Limited Vs. Commissioner of Income Tax & Others 2006 (1) TMI 55 - SUPREME Court and Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals 2013 (10) TMI 117 - SUPREME COURT also relied upon. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Entitlement to interest on refund under Section 54 of the erstwhile Gujarat Sales Act, 1969.
2. Whether appeal proceedings are an extension of assessment proceedings.
3. Direction to the first appellate authority to pass consequential orders within a specified time limit.

Issue-wise Detailed Analysis:

1. Entitlement to Interest on Refund under Section 54 of the erstwhile Gujarat Sales Act, 1969:
The core issue was whether the respondent was entitled to interest on the refund of purchase tax under Section 54 of the erstwhile Gujarat Sales Act, 1969. The Tribunal had previously ruled in favor of the respondent, granting interest on the refund. The appellant challenged this decision, arguing that the department had not withheld the tax amount unjustifiably and that the statute did not explicitly provide for such interest. The court referred to a previous decision in the case of State of Gujarat vs. Doshi Printing Press, which held that interest could be awarded as a compensatory measure even if not expressly provided by the statute. The principles established in this case were applied, affirming the respondent's entitlement to interest on the refund.

2. Whether Appeal Proceedings are an Extension of Assessment Proceedings:
The Tribunal had concluded that appeal proceedings are an extension of the original assessment proceedings. This was significant because it influenced the decision to award interest on the refund. The appellant contended that this interpretation was incorrect. However, the court upheld the Tribunal's view, referencing the decision in the case of Ami Pigment, which supported the notion that appeal proceedings are indeed an extension of assessment proceedings. This interpretation was crucial in determining the respondent's entitlement to interest on the refund.

3. Direction to the First Appellate Authority to Pass Consequential Orders within a Specified Time Limit:
The Tribunal had directed the first appellate authority to pass consequential orders within a specified time limit. The appellant challenged this directive, but the court found no fault in the Tribunal's order. The court emphasized the importance of timely resolution of tax disputes and upheld the Tribunal's direction to the first appellate authority to expedite the process.

Conclusion:
The court dismissed the tax appeals, affirming the Tribunal's decision on all counts. It was held that the respondent was entitled to interest on the refund under Section 54 of the erstwhile Gujarat Sales Act, 1969. The court also upheld the view that appeal proceedings are an extension of assessment proceedings and found no issue with the Tribunal's directive to the first appellate authority to pass consequential orders within a specified time limit. The judgment reinforced the principle that interest could be awarded as a compensatory measure even if not expressly provided by the statute, ensuring fair treatment of taxpayers.

← Previous Next →