2013 (3) TMI 84 - HC - VAT and Sales Tax

Refund of excess TDS - assessee demanded refund an amount along with interest @ 18% from the date of assessment order till the date of refund voucher - Held that - As decided in Triveni Fuels, Allahabad 2005 (5) TMI 609 - ALLAHABAD HIGH COURT it is the obligation and statutory duly of the Assessing Authority to refund to the dealer any amount of tax, fee or other dues which have been paid in excess of the amount due from him under the Act. However, before refunding the amount Assessing Authority is enjoined upon to adjust the same towards the tax or any other amount outstanding against the dealer under the Act or under the Central Sales Tax Act and only the balance, if any, is to be refunded. The State legislature has also taken care of the delay, if any caused in making the refund. Explanation I provides that the date of refund shall be deemed to be the date on which intimation regarding preparation of the refund voucher is sent to the dealer & if the amount refundable is not refunded within three months from the date of the order of refund then interest @ 18% per annum is payable from the date of the order or the receipt of the order. Applying these principles to the facts of the present case it is found that the long time spent by the authorities in getting the verification of the TDS certificate would not absolve them from making payment of interest as provided under section 29(2) of the Act and the petitioner cannot be made to suffer for no fault of it - the petitioner is entitled for interest @ 18% per annum from the date of assessment order till the date of refund within a month from the date a certified copy of this order is produced before the said authority.

Summary

Issues:
Refund of excess tax deducted at source, liability to pay interest @ 18% per annum under Section 29(2) of the Act, delay in verifying TDS certificate, denial of refund, applicability of interest on delayed refund.

Refund of Excess Tax Deducted at Source:
The petitioner, a private limited company, sought a refund of excess tax deducted at source under the U.P. Trade Tax Act for the assessment year 2000-2001. The Deputy Commissioner Assessment created a liability towards tax, but the petitioner claimed adjustment of the tax deducted at source, resulting in a balance refundable to the petitioner. Despite reassessment proceedings and adjustments, a significant sum remained to be refunded. The refund was initially denied due to issues with the TDS certificate's prescribed form. The court noted that the amount of tax deducted at source was ultimately found to be true on verification, emphasizing the department's liability to refund the excess amount.

Liability to Pay Interest under Section 29(2) of the Act:
The petitioner contended that the respondents were liable to pay interest @ 18% per annum under Section 29(2) of the Act due to delays in verifying the TDS certificate and making the refund. The court referenced a Division Bench decision highlighting the obligation of the Assessing Authority to refund any excess amount and the provision for interest if the refund is delayed beyond three months from the order date. The court held that the authorities cannot escape liability for interest if the verification process takes a long time, as provided under Section 29(2) of the Act.

Delay in Verifying TDS Certificate and Denial of Refund:
The respondent initially denied a portion of the refund amount, citing issues with the TDS certificate's prescribed form. However, the petitioner argued that the delay in verifying the certificate should not absolve the authorities from paying interest as mandated by the Act. The court, applying principles from a previous case, emphasized that the petitioner should not suffer due to delays caused by the authorities in verifying the TDS certificate.

Applicability of Interest on Delayed Refund:
After considering the arguments presented, the court held that the petitioner was entitled to interest @ 18% per annum from the date of the assessment order till the date of refund. The respondent was directed to compute the interest amount and make the payment within a specified timeline. The court allowed the writ petition, ruling in favor of the petitioner and emphasizing the respondent's obligation to pay interest on delayed refunds as per the statutory provisions.

This detailed analysis of the judgment highlights the key issues surrounding the refund of excess tax deducted at source, the liability to pay interest under the Act, delays in verifying the TDS certificate, denial of refund, and the court's decision regarding the applicability of interest on delayed refunds.