2020 (2) TMI 365 - HC - VAT and Sales Tax

Interest on delayed refunds - Section 54 of the Gujarat Sales Tax Act, 1969 - HELD THAT - Without entering into any controversy with regard to payment of interest and without going into the issue whether Section 54 is applicable or not, the respondent No.2 are directed to pay interest on the amount of ₹ 2,98,800/- from the date of the decision of this Court in the Tax Appeal No.275 of 2009, i.e., 16th November, 2016. Interest shall be calculated at the rate of 9% per annum from 16th November, 2016 till the date of actual payment. Application disposed off.

Summary

Issues involved:
Refund of tax amount deposited on ad hoc basis, entitlement to interest on refunded amount under Section 54 of Gujarat Sales Tax Act, 1969.

Analysis:

Issue 1: Refund of tax amount deposited on ad hoc basis
The writ applicant sought a writ of mandamus for the refund of ?2,98,200 deposited on an ad hoc basis, following a decision in Tax Appeal No.275 of 2009. The Court observed that the refund became due as a consequence of its decision in the tax appeal, where it quashed the addition made by the Commercial Tax Officer. Despite the writ applicant's letter to the Department and subsequent lack of response, the Court intervened upon notice to the respondents. Eventually, the Assistant State Tax Commissioner sanctioned the refund of the amount.

Issue 2: Entitlement to interest on refunded amount under Section 54 of Gujarat Sales Tax Act, 1969
The Assistant State Tax Commissioner, while sanctioning the refund, noted that as per Section 54 of the Gujarat Sales Tax Act, 1969, the writ applicant was not entitled to any interest on the refunded amount. However, the Court intervened to decide whether interest should be paid on the refunded amount. Section 54 provides for interest on delayed refunds, specifying the rate and conditions for payment. Despite not delving into the controversy of interest payment and applicability of Section 54, the Court directed the respondent to pay interest at a rate of 9% per annum from the date of the Court's decision in Tax Appeal No.275 of 2009 until the actual payment date.

Conclusion:
The Court disposed of the writ application by ordering the payment of interest on the refunded amount, despite the initial stance taken by the Assistant State Tax Commissioner. This judgment clarifies the entitlement to interest on refunded tax amounts under Section 54 of the Gujarat Sales Tax Act, 1969, and sets a specific rate for such interest payments.