2019 (9) TMI 172 - HC - VAT and Sales Tax

Interest on delayed refund - Section 54(1)(aa) of Gujarat Sales Tax Act 1969 - relevant time - date of deposit of the tax till the date of the assessment order - excluding the period during which the appeals were pending but the delay was not attributable to dealer - whether the third proviso to Section 54 would be applicable to sub-clause (1)(aa) of Section 54? HELD THAT - Generally speaking a proviso is intended to limit the enacted provision so as to except something which would have otherwise been within it or in some measure to modify the enacting clause. Sometimes a proviso may be embedded in the main provision and becomes an integral part of it so as to amount to a substantive provision itself. The third proviso is in context with Section 54(1)(a) and (b). The third proviso will have no application so far as Section 54(1)(aa) is concerned. Explanation 1 to the third proviso makes the picture further clear. Explanation 1 clarifies that if the delay in granting the refund within the period specified in clause (a) or (b) is attributable to the dealer whether wholly or in a part the period of the delay attributable to him shall be excluded from the period for which interest is payable. If the third proviso as invoked by the respondents is not applicable and could not have been invoked the entire calculation of the amount by wrongly excluding the period would be incorrect. The entire exercise will have to be undertaken afresh keeping in mind what has been observed by this Court in this judgement more particularly the fact that the third proviso could not have been invoked as the same is not applicable - In the peculiar facts of the case and also having regard to the fact that this is a long drawn litigation this time we direct the Commissioner himself to look into the matter afresh - matter on remand.

Summary

Issues Involved:
1. Non-granting of interest on refund for the period 1994-95.
2. Legality of the assessment order dated 10.10.2017.
3. Calculation of interest on the delayed refund under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.
4. Applicability of the third proviso to Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.

Detailed Analysis:

Issue 1: Non-granting of Interest on Refund for the Period 1994-95
The petitioner, a public limited company, challenged the assessment order dated 10.10.2017, which declined to grant interest on the delayed refund for the assessment period 1994-95 under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969. The petitioner also contested the order dated 03.08.2019, which granted interest on the refund amount from the date of tax deposit till the date of the assessment order, excluding the period during which appeals were pending.

Issue 2: Legality of the Assessment Order Dated 10.10.2017
The assessment order dated 10.10.2017 by the Deputy Commissioner of Commercial Tax determined the total tax and granted a refund but declined to grant any interest. The petitioner argued that the order did not comply with the Tribunal's directive to grant interest on the refund amount.

Issue 3: Calculation of Interest on the Delayed Refund Under Section 54(1)(aa)
The petitioner contended that the interest should be calculated from the date of closure of the accounting year to the date of the assessment order. The respondents, however, calculated interest only for the period of 842 days, excluding the period during which appeals were pending. The petitioner provided a calculation chart showing a significant variance in the interest amount due, claiming an entitlement to ?4,40,00,000, whereas the respondents calculated ?70,83,338.

Issue 4: Applicability of the Third Proviso to Section 54(1)(aa)
The core issue was whether the third proviso to Section 54(1)(aa) applied to the case, which excludes the period during which appeals or revisions are pending from the calculation of interest. The court held that the third proviso is applicable to Section 54(1)(a) and (b) and not to Section 54(1)(aa). The court emphasized that the proviso should be interpreted in relation to the principal matter it qualifies, and in this case, it does not apply to Section 54(1)(aa).

Conclusion:
The court quashed the order dated 03.08.2019, directing the Commissioner to reassess the interest calculation without invoking the third proviso to Section 54(1)(aa). The Commissioner was instructed to consider the petitioner's calculation chart and pass a fresh order within four weeks, ensuring that the petitioner is heard before the final determination. The court made the rule absolute to this extent in each writ application and permitted direct service.