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2019 (11) TMI 170 - HC - VAT and Sales TaxEntitlement to Interest on amount retained by the State Commercial Tax Authorities between the period 23.11.2005 and 29.07.2011 - TNGST Act - Section 24(4) of the Act - HELD THAT - Admittedly, the refund has been determined and paid over to the petitioner herein both within the timelines set out by the Supreme Court and the provisions of Section 24(4) of the Act - In my considered view, it is only if the said timelines had been breached that interest would statutorily, be payable. The provisions of Section 24(4) of the Tamil Nadu General Sales Tax Act specifically provide for (i) the quantification of refund (ii) the stage of such quantification, being final assessment/revision assessment/appellate, revisional, review order, (iii) refund of tax determined in such final assessment or order as in point (ii) above, (iv) prescription of a timeline for issue of such refund, being 90 days from the date of assessment/appellate order reaching finality (v) provision for interest in the event of breach of the aforesaid scheme. In the admitted facts and circumstances of the present case, the assessee finds no support from the provisions of Section 24(2) of the Act. In SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS 2006 (1) TMI 55 - SUPREME COURT , the Supreme Court considered a prayer for grant of interest for delay in effecting refund pursuant to an appellate order. After analysing the provisions of Sections 244 and 244A of the Income Tax Act 1961, the Bench concluded that the statute did not provide for the payment of interest as prayed for. However on general principles the Bench held that the assessee ought to be compensated for the inordinate delay in receiving money legally due to it, in that case, seventeen long years. Thus the Department was directed to pay interest at the rate of 9% for part of the period when the petitioner was deprived of the capital. Petition dismissed.
Issues Involved:
1. Entitlement of the petitioner to interest in terms of Section 24(4) of the Tamil Nadu General Sales Tax Act. 2. Claim for compensation due to delay in refund. Issue-wise Detailed Analysis: Entitlement to Interest under Section 24(4): The petitioner, a partnership firm, challenged the order dated 16.09.2011 seeking interest at the rate of 12% on an amount of ?6,02,08,601/- retained by the State Commercial Tax Authorities from 23.11.2005 to 29.07.2011. The legal issue revolves around the entitlement of the petitioner to interest under Section 24(4) of the Tamil Nadu General Sales Tax Act. The Additional Government Pleader argued that interest under Section 24(4) is payable only if the excess amount determined in appeal, revision, or review is not refunded within 90 days from the date of such order. The court noted that the determination of the excess amount payable to the petitioner was made on 16.03.2011 by the Supreme Court, which directed the Department to quantify the excess within three months and pay the amount within two months thereafter. The refund was made on 29.07.2011, within the timelines set by the Supreme Court and Section 24(4) of the Act. Section 24(4) states that interest is payable if the excess amount is not refunded within 90 days from the date of the order of assessment, revision, or review. Since the refund was made within the stipulated period, the court held that the petitioner is not entitled to interest under Section 24(4). Claim for Compensation:The petitioner argued for compensation based on the Supreme Court's judgment in Sandvik Asia Ltd. vs. Commissioner of Income Tax I, Pune, and others, which awarded compensation for inordinate delay in effecting a refund. However, the court noted that the Full Bench in Commissioner of Income Tax, Gujarat v. Gujarat Fluro Chemicals clarified that only statutory interest provided under the revenue statute is claimable, and no other interest on such statutory interest is payable. The court further noted that compensation is payable only in cases where there has been injury suffered due to any action. In this case, the recovery of tax was pursuant to a proper legal process and in accordance with law. The petitioner had the option to obtain a stay of recovery but did not do so. The court found no evidence of perversity or vexatiousness in the actions of the Revenue Department. The court also distinguished the case from the Gujarat High Court's decision in State of Gujarat vs. Doshi Printing Press, which dealt with specific provisions of the Gujarat Sales Tax Act that are not analogous to the Tamil Nadu General Sales Tax Act. Based on the above analysis, the court concluded that the petitioner is not entitled to compensation for the delay in refund. Conclusion:The writ petition was dismissed with no costs, as the court found no merit in the petitioner's claims for interest under Section 24(4) or for compensation due to the delay in refund.
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