2017 (1) TMI 1347 - HC - VAT and Sales Tax

Eligibility to receive interest u/s 14-C on refund - whether during the pendency of the reassessment order in exercise of the powers conferred under Section 12(8) of the Act, the assessee is entitled to get interest from the date of first assessment order under Section 12(1) of the Act? - Held that - the assessee was conscious about the tax liability and intentionally he has not furnished proper return before the Assessing Officer and subsequently, it was found that the assessee has suppressed the material facts from the Assessing Officer in submission of return and accordingly, the amount of return has been reassessed and the refund amount has been reduced, which has never been disputed by the assessee, rather it has been accepted, which goes to suggest that there is suppression and misrepresentation by the assessee in submitting the return. The assessee would be entitled to get interest only when the assessment for the particular year would be concluded finally. Hence, the contention of the petitioner that it is entitled to get interest from the date of first application, which has been filed by it after the first order of refund of amount has been passed, is not acceptable to this Court - application dismissed - decided against applicant.

Summary

Issues Involved:
1. Challenge to the order passed under Section 12(a) of the Orissa Sales Tax Act, 1947.
2. Entitlement to interest under Section 14-C of the Orissa Sales Tax Act, 1947.
3. Interpretation of statutory provisions regarding refund and interest.

Issue-Wise Detailed Analysis:

1. Challenge to the Order Passed Under Section 12(a) of the Orissa Sales Tax Act, 1947:
The petitioner, a registered dealer, challenged the order passed under Section 12(a) of the Orissa Sales Tax Act, 1947. The petitioner was assessed for the year 1993-94, and the refundable amounts were determined. However, the refund was delayed due to the pendency of reassessment under Section 12(8) of the Act. The petitioner argued that the reassessment proceedings should not delay the refund and sought interest on the delayed refund.

2. Entitlement to Interest Under Section 14-C of the Orissa Sales Tax Act, 1947:
The petitioner claimed interest from the date of the first application for refund, arguing that the statutory provisions entitled them to such interest. The Revenue opposed this, stating that interest could only be paid after the assessment was finally settled. The court examined Section 14-C, which stipulates that amounts refundable under Section 14, if not refunded within ninety days from the date of receipt of an application, shall carry interest at the rate of six percent per annum from the date of expiry of the period specified.

3. Interpretation of Statutory Provisions Regarding Refund and Interest:
The court discussed the relevant statutory provisions, including Sections 11, 12, 12(8), 14, 14-C, and 14-D of the Act. Section 11 requires dealers to furnish returns, and Section 12 provides for the assessment of tax. Section 12(8) allows for reassessment if the turnover has escaped assessment or been under-assessed. Section 14 provides for the refund of excess tax paid, and Section 14-C deals with the payment of interest on refundable amounts. Section 14-D allows withholding of refunds if an appeal or further proceeding is pending.

Conclusion:
The court concluded that the petitioner was not entitled to interest from the date of the first application for refund due to the reassessment proceedings. The court noted that the reassessment was initiated due to suppression of material facts, and the refund was made within the statutory period after the reassessment was finalized. The court emphasized that allowing interest from the date of the first application would reward the petitioner despite the suppression of facts. Therefore, the court dismissed the writ applications, holding that the petitioner was entitled to interest only after the final assessment was concluded.