2018 (11) TMI 665 - HC - VAT and Sales Tax

Entitlement to Interest on delayed refund - Section 50 of the Karnataka Value Added Tax Act, 2003 - Held that - Section 50 of the Act does not envisage of any reasons for not computing the interest on the refund due to the Assessee while giving effect to the orders of the Appellate Authorities - The words shall pay such persons simple interest at 6% are mandatory and no discretion is allowed to the lower Authorities to not to compute award with interest for such refund admittedly due, which in the present case, stands paid to the Assessee. The Respondent-Department is directed to immediately compute the interest on the refund due to the Petitioner - petition allowed.

Summary

Issues:
Refund of excess tax amount without interest as per Karnataka Value Added Tax Act, 2003.

Analysis:
The petitioner, M/s. Shapoorji Pallonji & Company Limited, sought a writ of Mandamus for the immediate refund of excess tax amount deposited for specific periods, along with 6% interest per annum. The ground raised was the absence of interest on the refund amount awarded by the Assessing Authority in compliance with the Orders passed by the Joint Commissioner [Appeals]. The Respondent-Department explained the delay in computing interest due to other assessment works. The Court noted that Section 50 of the Act mandates the payment of simple interest at 6% per annum on refund amounts, with no discretion allowed to lower Authorities to withhold interest. The Court emphasized that the provision requires interest payment from thirty-five days after the Appellate Order till the actual refund date.

The Court, after hearing both parties, held that the Department's reasons for not computing interest were not valid under Section 50 of the Act. The provision's language "shall pay such persons simple interest at 6%" is mandatory, leaving no room for discretion in awarding interest on refunds. Consequently, the Court allowed the writ petitions, directing the Respondent-Department to compute and pay interest on the refund amount to the Petitioner within fifteen days. Failure to comply would result in the responsible Authority paying a cost of ?50,000 each from personal resources for the delay and non-payment of interest to the Assessee.