2023 (8) TMI 1128 - HC - VAT and Sales Tax

Interest on delayed refund sanction - HELD THAT - There is no merits in the contention of the Commercial Tax Department that the petitioner is not entitled to the interest during the pendency of the proceeding before this Court in M/S. SWATHY CHEMICALS LTD. 2021 (3) TMI 1187 - MADRAS HIGH COURT Merely because the order dated 20.01.1997 of the Appellate Assistant Commissioner was revised by the Joint Commissioner vide order dated 28.05.2003 which was affirmed vide order dated 05.12.2003 pursuant to the show cause notice dated 04.05.1998 would not mean that the petitioner is not entitled to interest during the aforesaid period. Merely because the Department had revised the order of the Appellate Assistant Commissioner dated 20.01.1997 in AP.No.CST 188/95 would not mean the petitioner is not entitled to interest. Once the order of the Joint Commissioner has been restored, the petitioner is entitled to interest as calculated by the petitioner which was also confirmed by the 2nd respondent in its communication dated 30.11.2021. The respondents are directed to refund the interest amount of Rs. 6,21,919.74/- after adjusting any amount if any paid towards interest during the interregnum, within a period of two weeks from the date of receipt of a copy of this order - petition allowed.

Summary

Issues: Refund of interest amount on the refund of tax, Revision of assessment order, Entitlement to interest during pendency of proceedings.

Refund of Interest Amount: The petitioner filed a Writ Petition seeking the direction for the 2nd respondent to pay the interest amount on the refund of tax. The petitioner succeeded before the Appellate Assistant Commissioner and became entitled to a refund. The Court directed the respondent to refund the amount with interest at 12% per annum. Subsequently, the Commercial Tax Department refunded a sum to the petitioner, who then requested interest as per the Court's order.

Revision of Assessment Order: The Commercial Tax Department issued a show cause notice to revise the order of the Appellate Assistant Commissioner. The order was revised by the Deputy Commercial Tax Officer, leading to a challenge by the petitioner in a separate Writ Petition. The Court allowed the Writ Petition, restored the original order, and directed the refund of excess tax paid by the petitioner.

Entitlement to Interest: The Court held that the petitioner is entitled to interest not only on the amount paid back but also as ordered in a previous judgment. The Court directed the respondent to refund 50% of the excess tax paid by the petitioner and re-compute the interest payable. The petitioner's entitlement to interest was upheld despite the Department's contention that no interest was payable during the pendency of proceedings.

Ultimately, the Court allowed the Writ Petition, directing the respondents to refund the interest amount to the petitioner within a specified period, after adjusting any previous payments. The Court rejected the Department's argument against paying interest during the proceedings and upheld the petitioner's entitlement to the interest amount as calculated.