2019 (12) TMI 222 - HC - VAT and Sales Tax

Liability to deduct interest on delayed refund from fourth respondent (VAT officer), personally, from out of his salary - Direction issued by the Single Member Bench of the HC - section 50 of Karnataka VAT Act - HELD THAT - There was no specific concession by the learned Additional Government Advocate that it was the fourth respondent in the writ petition who was liable to pay interest in terms of Section 50 of Karnataka Value Added Tax Act. In second paragraph, a direction was issued to the fourth respondent in the writ petition to refund the amount. Further direction was issued to the fourth respondent to refund the amount and to pay simple interest at the rate of 6% p.a., from out of his salary. No reasons have been assigned by the learned single Judge as to why fourth respondent in the writ petition was personally liable to pay interest from out of his salary. Therefore, it was necessary for the writ petitioner to implead the appellant in writ appeal No.1430/2019 in his individual capacity so that notice could have been issued to the said officer and he could have been heard by the learned single Judge on the liability to pay interest from his salary. It is directed that specific notice of writ petition ought to have been served to the fourth respondent in the writ petition in his personal capacity before directing him to pay interest from out of his salary Paragraph 2 of the impugned order dated 29th October, 2015 is hereby quashed and set aside; - the direction contained in Paragraph 3 of the impugned order is against the revenue authority which is binding on the State Government and the said direction is not against any specific officer. - appeal allowed.

Summary

Issues:
- Interpretation of Section 50 of the Karnataka Value Added Tax Act, 2013.
- Liability of officers to pay interest on refunds.
- Proper impleadment of parties in writ petitions.
- Implementation of court directions by the State Government.

Analysis:
1. The judgment involves an appeal against a common order based on a writ petition filed by the seventh respondent regarding a refund of tax, penalty, and interest under the Karnataka Value Added Tax Act, 2013.
2. The impugned order directed the fourth respondent to refund the amount with 6% interest from his salary, which was based on a concession made by the learned Additional Government Advocate.
3. The High Court found an inconsistency in the order as the direction to pay interest was against the revenue authority in one paragraph and against a specific officer in another, leading to the State Government implementing the refund with interest based on the former direction.
4. The appellant argued that proper notice was not served to them individually, and they were not liable to pay interest as per Section 50 of the Act.
5. The court noted that the direction to pay interest from the salary of the fourth respondent should have been set aside due to lack of specific notice to him in his personal capacity.
6. The judgment clarified that the direction to refund the amount with interest was against the revenue authority and not any specific officer, which the State Government correctly implemented.
7. The court ordered the State to refund the interest amount recovered from one appellant and stated that if any party was personally liable to pay interest, the State could initiate appropriate proceedings.
8. The judgment quashed the direction to pay interest from the salary of the fourth respondent, upheld the direction against the revenue authority, and ordered the State to refund the interest amount to one appellant within a specified time.

This detailed analysis covers the interpretation of legal provisions, the liability of officers, impleadment of parties, and the implementation of court directions by the State Government as addressed in the judgment.