1997 (8) TMI 508 - HC - VAT and Sales Tax

Summary

Issues:
Entitlement to interest on belated payment(s) under U.P. Trade Tax Act, 1948.

Analysis:
The main issue in this writ petition was whether the petitioner is entitled to interest on belated payments. The petitioner claimed a refund of Rs. 14,195 as a result of an order passed by the Trade Tax Tribunal. The order for refund was passed on February 7, 1996, and a refund voucher was prepared on March 14, 1996, which was later dishonored by the bank due to being presented beyond the validity period. Another voucher prepared on August 29, 1996, suffered the same fate. The petitioner alleged that the amount was refunded sometime after May 5, 1997, without specifying the exact date.

The court examined Section 29 of the U.P. Trade Tax Act, 1948, which provides for the refund of excess amounts paid by a dealer. Subsection (2) of Section 29 stipulates that if the refund is not made within three months from the date of the refund order, the dealer is entitled to simple interest at the rate of eighteen per cent per annum. The court noted that interest becomes due after the expiry of three months from the due date of refund, or from the date of receipt of the refund order if passed by another competent authority.

The court found that the respondent delayed the refund without justification. The first voucher was issued after the validity period, and the second voucher was dispatched after the expiry of its validity period. The court held that the respondent was liable to pay interest at the rate of eighteen per cent as per Section 29(2) of the Act. The petitioner was entitled to interest from the date immediately after the expiry of three months from the Tribunal's order until the delivery of a valid voucher.

The Standing Counsel argued that interest liability cannot arise before the refund is claimed, citing Rule 90 of the U.P. Trade Tax Rules. However, the court rejected this argument, stating that the liability for refund arises immediately after a final order is passed. In this case, the order of the Appellate Tribunal was passed on February 22, 1993, making the respondent liable to refund the amount irrespective of when the petitioner applied for the refund.

In conclusion, the writ petition was allowed, and the respondent was directed to pay interest to the petitioner within one month from the date a certified copy of the order was produced before him.