2023 (1) TMI 1181 - HC - VAT and Sales Tax

Interest on the refund amount - respondents contends that the amount deposited by the petitioner as a pre-condition for maintaining the appeal, is required to be considered as tax, as it was against the pending liability - inaction for an inordinately long period - Section 30(4) of the Delhi Sales Tax Act, 1975 - HELD THAT - In the instant case the petitioner had pursued the respondents for processing its claim for tax and interest. Despite the same, the respondents had failed to take any action - Undisputedly, in compliance with the directions passed by this Court, the respondents were required to process the petitioner s application for refund along with interest in accordance with law. No contention has been advanced before this Court as to why the petitioner is not entitled to interest on the said amount. In the circumstances, we do not consider it apposite to relegate the petitioner to the alternate remedy, in this case. Guilty of inaction for an inordinately long period - HELD THAT - Once the petitioner had filed the application for seeking refund of the amount along with interest, it was incumbent upon the respondents to either allow or reject the same as per law. The inaction, if any, is largely on the part of the respondents. First of all, the respondents ought to have refunded the amount as it was deposited to avail of the remedy of appeal without awaiting filing of any form - Admittedly, the petitioner had once again filed a written representation on 14.10.2020, however, this representation was also not disposed of within a reasonable period and the petitioner was constrained to approach this Court. The respondents are directed to pay interest on the sum of ₹10,00,000/- at the rates as specified under Section 30(4) of the Act, computed from the ninetieth day after the date of application dated 18.05.2012 till the date of payment - Petition allowed.

Summary

Issues:
1. Claim for interest on a refund amount of Rs. 10,00,000.
2. Interpretation of Section 30(4) of the Delhi Sales Tax Act, 1975.
3. Consideration of the nature of the deposit made by the petitioner.
4. Entitlement to interest on the refund amount.
5. Assessment of the petitioner's inaction and alternate remedy.

Issue 1: Claim for Interest on Refund Amount:
The petitioner filed a petition challenging the respondents' refusal to pay interest on a refund amount of Rs. 10,00,000. The petitioner contended that as it was entitled to a refund of duty, interest should also be granted under Section 30(4) of the Act. The respondents had failed to refund the amount despite the petitioner's repeated requests and a court order directing them to decide on the refund application.

Issue 2: Interpretation of Section 30(4) of the Act:
Section 30(4) of the Act stipulates that if a refund is not made within 90 days of the claim, the person is entitled to simple interest. The court emphasized the importance of this provision in determining the petitioner's entitlement to interest on the refund amount of Rs. 10,00,000.

Issue 3: Nature of Deposit Made by Petitioner:
The respondents argued that the amount deposited by the petitioner should be considered as tax against a pending liability. However, regardless of the nature of the deposit, the court held that the petitioner was entitled to a refund of the amount and, if considered a tax deposit, to interest as per Section 30(4) of the Act.

Issue 4: Entitlement to Interest on Refund Amount:
The court ruled that the petitioner was entitled to interest on the refund amount, irrespective of whether the deposit was for appeal purposes or as tax. The respondents were directed to pay interest at the rates specified under Section 30(4) from the ninetieth day after the date of the refund application till the actual payment date.

Issue 5: Assessment of Petitioner's Inaction and Alternate Remedy:
The respondents contended that the petitioner had an alternate remedy and had not taken action for an extended period. However, the court found no merit in these arguments, noting that the petitioner had diligently pursued the refund and was not at fault for any delays. The court rejected the notion that an alternate remedy precludes its jurisdiction in this case.

This judgment highlights the petitioner's successful claim for interest on a refund amount, emphasizing the application of Section 30(4) of the Act. It clarifies the entitlement to interest irrespective of the nature of the deposit, and addresses the petitioner's diligent pursuit of the refund against the respondents' inaction.