2012 (11) TMI 1046 - HC - VAT and Sales Tax

Refund claim along with interest - Held that - In the light of the provision of sub-sections (9) and (10) of section 20 the petitioner was entitled to interest at one per cent per month after 60 days from the said order i.e. from November 2 2011 and the interest could not be denied on the ground that notice had been issued under section 34 of the Act. Writ petition allowed and the respondents are directed to calculate the amount of interest at one per cent per month from November 2 2011 on the sum of Rs. 43, 84, 385 till the date of payment.

Summary

Issues Involved:
1. Entitlement of the petitioner to the refund of Rs. 43,84,385.
2. Entitlement of the petitioner to interest on the delayed payment of the refund.

Detailed Analysis:

1. Entitlement of the petitioner to the refund of Rs. 43,84,385:
The petitioner, a private limited company registered under the Haryana Value Added Tax Act, 2003, and the Central Sales Tax Act, 1956, filed a return for the assessment year 2007-08. The assessment was finalized on March 16, 2011, entitling the petitioner to a refund of Rs. 43,88,385 due to excess deduction of tax at source. However, the refund was not issued, prompting the petitioner to file an application on July 27, 2011, which was received by the respondent on August 9, 2011. Subsequently, the assessment was rectified on September 2, 2011, reducing the refund to Rs. 43,84,385. Despite this, the refund voucher was not issued, leading to the filing of the writ petition.

In the short reply by respondents, it was stated that the assessment was not finalized as proceedings under Section 34 of the Act were pending, and the refund amount was subject to approval by the Excise and Taxation Commissioner. However, on August 28, 2012, it was communicated that the sanction for the refund had been recommended and forwarded for release. By October 5, 2012, the petitioner acknowledged receipt of the refund amount but sought interest for the delay.

2. Entitlement of the petitioner to interest on the delayed payment of the refund:
The primary issue for adjudication was the petitioner's entitlement to interest on the delayed refund. Section 20 of the Act governs the grant of refunds, with sub-sections (9) and (10) specifically addressing interest on delayed refunds. Section 20(9) stipulates that refunds made after 60 days from the application date shall carry simple interest at one per cent per month from the application date to the refund date. Section 20(10) provides that refunds not issued within 60 days from the order date shall carry simple interest at one per cent per month from the order date to the refund date.

In this case, the assessment order was initially passed on March 16, 2011, and rectified on September 2, 2011. The petitioner's application for refund dated July 27, 2011, was received on August 9, 2011. The refund case was forwarded on November 3, 2011, to the JETC for transmission to the Commissioner. Despite the rectification order, the refund was delayed, and the petitioner approached the court on March 14, 2012. The revisional proceedings initiated under Section 34 of the Act were filed on August 21, 2012. The court found that the authorities failed to act within the prescribed time frame, entitling the petitioner to interest from November 2, 2011, at one per cent per month.

Precedents and Conclusion:
The court referenced similar cases, such as Bhasin Associates v. State of Haryana and Khem Ram Devi Sahai v. State of Haryana, where refunds along with statutory interest were directed despite pending revisional notices. In Escotel Mobile Communication Ltd. v. State of Haryana, the court directed refunds with interest rates of 12% and 18% per annum for delays under the Haryana General Sale Tax Act, 1973.

Judgment:
The writ petition was allowed, directing the respondents to calculate interest at one per cent per month from November 2, 2011, on the sum of Rs. 43,84,385 until the payment date. The interest amount was to be paid within one month from the receipt of the certified order copy. The original case record was to be returned to the concerned official after proper receipt.