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2025 (4) TMI 438 - HC - VAT / Sales TaxInterest on delayed refund - relevant date for calculation of interest - Section 55 of JVAT Act - HELD THAT - During pendency of the instant application the respondents refunded the principal amount of tax on 29.03.2024. However it is observed that the Counter Affidavit is silent on the aspect of statutory interest that the Petitioner is entitled to receive under Section 55 of the JVAT Act. Further the mandate of Section 55 of JVAT Act is that Refund Application ought to be decided within 90 days of the date of its filing. Further there is no mention in the Counter Affidavit as to why this delay in processing the Refund Application of the Petitioner is being caused. Further non-allocation of funds cannot be a reason to delay the legitimate refund of the Petitioner otherwise the very mandate of Section 55 of the JVAT Act will be rendered otiose. At this stage it is also necessary to indicate that the Petitioner has categorically stated in Paras 17 21 43 and 44 of the Writ Petition that the excess demand notice dated 31.08.2020 was received by the Petitioner only on 15.12.2022 and therefore interest ought to be paid from the date of issuance of excess demand notice itself since the Petitioner was unable to file its Refund Application in absence of the excess demand notice. No reply whatsoever has been given by the Respondents to such averments made in the Writ Petition and no proof of service of the Demand Notice has been brought on record by the Respondents and thus the statements made in these paragraphs under reference are deemed to have been admitted by the Respondents. The Respondents are liable to pay interest to the Petitioner from the expiry of 90 days from the date of submission of the Refund Application pursuant to receiving of the Demand Notice as claimed by the petitioner on 15.12.2022 and also interest from the date of issuance of Demand Notice dated 31.08.2020 since the Petitioner was unable to file its Refund Application in absence of the excess demand notice till the payment of the principal amount during pendency of this application Conclusion - The petitioner is entitled for 6% Simple Interest on the total amount of refund from 31.08.2020 i.e. the date of issuance of Demand Notice as stated hereinabove till the principal amount has been paid after reducing the period which the petitioner took in filing the Refund application after receiving the same from the Respondents on 15.12.2022. Accordingly it is directed that the respondents shall pay the interest after calculating the same as indicated. Application allowed.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment are: (i) Whether the petitioner is entitled to a refund of Rs. 1,47,62,037/- for the Assessment Year 2011-12 along with statutory interest under Section 55 of the Jharkhand Value Added Tax Act, 2005, from the date of issuance of the excess demand notice. (ii) Whether the delay by the Respondent Authorities in deciding the refund application constitutes a violation of Articles 14, 19(1)(g), and 265 of the Constitution of India. (iii) Whether the Respondents can insist on the satisfaction of outstanding dues for other assessment years before issuing a refund, especially when the Jharkhand Value Added Tax Act does not envisage such a denial. ISSUE-WISE DETAILED ANALYSIS (i) Entitlement to Refund and Interest under Section 55 of the JVAT Act The relevant legal framework involves Section 55 of the Jharkhand Value Added Tax Act, 2005, which mandates the decision on a refund application within 90 days of its filing. The Court referenced its prior decision in M/s. Kirloskar Brothers Ltd. v. State of Jharkhand & Ors., which clarified that the JVAT Act does not allow denial of a refund application based on existing dues. The Court reasoned that the petitioner was entitled to interest from the date of issuance of the excess demand notice, as the petitioner was unable to file the refund application without it. The Respondents' failure to provide a timely response or proof of service of the demand notice led the Court to accept the petitioner's claims. The Court applied the law to the facts by determining that the Respondents were liable to pay interest from the expiry of 90 days from the date of submission of the refund application and from the date of issuance of the demand notice. (ii) Violation of Constitutional Rights The petitioner argued that the Respondents' inaction violated Articles 14, 19(1)(g), and 265 of the Constitution. The Court found that the Respondents' delay in processing the refund application and non-allocation of funds could not justify the delay, as it would render Section 55 of the JVAT Act ineffective. The absence of a counter-argument or explanation from the Respondents further supported the petitioner's position. (iii) Insistence on Satisfaction of Outstanding Dues The Court addressed the issue of whether the Respondents could insist on the satisfaction of outstanding dues before issuing a refund. The Court referenced its decision in the Kirloskar Brothers case, which held that the JVAT Act does not permit denial of a refund application based on existing dues. The Court rejected the Respondents' argument that the application was processed and funds were being allocated, as it did not address the statutory interest owed to the petitioner. SIGNIFICANT HOLDINGS The Court held that the petitioner is entitled to 6% simple interest on the total refund amount from the date of issuance of the demand notice until the principal amount was paid, after accounting for the delay in filing the refund application post-receipt of the demand notice. The Court directed the Respondents to calculate and pay the interest within eight weeks, failing which the petitioner would be entitled to a cost of Rs. 1,00,000/-. Key principles established include the necessity of adhering to statutory timelines for refund applications and the impermissibility of denying refunds based on outstanding dues under the JVAT Act. The Court emphasized that non-allocation of funds is not a valid reason for delaying refunds. The final determination was in favor of the petitioner, allowing the writ application and closing any pending interlocutory applications.
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