2013 (12) TMI 975 - HC - VAT and Sales Tax

Interest on refund u/s 38(2) of the Gujarat Value Added Tax Act, 2003 Refund granted on provisional assessment Held that - A registered dealer shall be entitled to received simple interest at the rate of 6% p.a. on the amount of such refund in pursuance of any order other than the audit assessment order or in pursuance of any order by any Court - on plain reading of subsection (2) of Section 38 order includes provisional assessment order/ provisional refund order the Tribunal has not committed any error and / or illegality in holding that the dealer shall be entitled to interest at the rate of 6% p.a on the provisional refund Decided against Appellant.

Summary

Issues:
1. Entitlement to interest on provisionally granted refund under Section 38(2) of the Gujarat Value Added Tax Act, 2003.

Analysis:
The appellant, State of Gujarat, filed a Tax Appeal against the Gujarat Value Added Tax Tribunal's order granting interest on a provisionally granted refund to a dealer. The Tribunal allowed the appeal by holding that the dealer was entitled to interest on the refund under Section 38(2) of the Act. The appellant contended that Section 38 does not provide for interest on provisional refunds. The appellant heavily relied on a Supreme Court decision stating that when the language of a provision is clear, no outside aid is required for interpretation. The main question was whether a dealer receiving a provisional assessment order and refund is entitled to interest on the provisional refund.

The Court examined Section 38 of the Act, which outlines the entitlement to interest on refunds. Subsection (1) provides for interest on tax refunds due to an assessment order, subject to certain conditions. Subsection (2) states that a dealer entitled to a refund under any other order shall receive interest on the refund amount. The Court clarified that the term "order" in Section 38(2) includes provisional assessment orders or refunds. Therefore, the Tribunal's decision to grant interest on the provisional refund was deemed correct.

The Court dismissed the appeal, upholding the Tribunal's decision that the dealer was entitled to interest on the provisionally granted refund under Section 38(2) of the Act. It was concluded that no substantial question of law arose in the appeal, and the decision was based on a correct interpretation of the law. The appellant's contention that no interest was payable on provisional refunds was rejected, affirming the dealer's entitlement to interest on the refund amount.

This detailed analysis of the judgment highlights the interpretation of Section 38 of the Gujarat Value Added Tax Act, 2003, regarding the entitlement to interest on provisionally granted refunds. The Court's decision clarified the scope of "order" under Section 38(2) and upheld the dealer's right to interest on the provisional refund amount, dismissing the appellant's appeal.