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2015 (8) TMI 1004 - PUNJAB & HARYANA HIGH COURT

2015 (8) TMI 1004 - PUNJAB & HARYANA HIGH COURT - TMI - Interest on refund of Tax demand – Interest to be granted from date of deposit or from the date of assessment order – Petitioner filed appeal before Appellate Authority claiming interest on refund of tax as demanded, appellate authority merely directed assessing authority to pay interest amount – Petitioner challenged order before Tribunal – Whether petitioner is entitled to interest from dates on which petitioner paid amounts to respondent .....

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General Sales Tax Act, 1948 which is not same as HGST Act which is involved in case – Therefore interest is payable from date of deposit – Impugned order modified by directing respondents to pay interest on amounts deposited from dates on which deposits were made till payment – Petition disposed of –Decided in favour of Petitioner. - CWP No. 16213-2014 - Dated:- 7-8-2015 - S. J. Vazifdar, ACJ And G. S. Sandhawalia, JJ. For the Appellant : Mr Sandeep Goyal, Adv For the Respondent : Ms Mamta Singl .....

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4 was made in respect of the assessment year 1989-1990 under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the HGST Act) and under the Central Sales Tax Act, 1956 raising a tax demand of ₹ 14,17,071/- on the ground that the goods which had been purchased from within the State of Haryana had been sold on a consignment basis and stock transfer basis. A demand for interest was also raised. Penal action under Section 47 was directed to be taken separately. Under the Centr .....

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08 passed by the Haryana Value Added Tax Tribunal. The Tribunal set aside the order and remanded the matter to the assessment authority for assessment following the decision of this Court in the case of State of Haryana and another Vs M/s Ambika Oil & Soap Industries, Rohtak, 103 STC 190. 3. The Excise and Taxation Officer-cum-Assessing Authority accordingly passed a fresh order dated 28.05.2009 holding that the petitioner was entitled to a refund of ₹ 11,47,390/-. This amount was paid .....

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late, interest for five months amounting to ₹ 80,314/- was also allowed. The same was, however, not paid as the matter was referred to the Excise and Taxation Commissioner for approval. 4. The petitioner filed an appeal before the first Appellate Authority claiming interest for the earlier period as well. The first Appellate Authority, however, merely directed the assessing authority to pay interest of ₹ 80,314/- within 30 days from the receipt of its order dated 23.10.2012. The peti .....

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oucher alongwith the fresh assessment order dated 28.05.2009 in view of Rule 35(1)(a). The Tribunal held that the petitioner was entitled to interest on the delayed payment of refund with effect from 28.05.2009 till the date of refund i.e. 04.01.2010. The Tribunal relied upon the judgement of this Court in the case of M/s Khem Ram Devi Sahai Vs State of Haryana, [2004] 23 PHT 330 (P&H). 5. The question, therefore, is whether the petitioner is entitled to interest from the dates on which the .....

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tax payable, simple interest on the amount of tax remaining unpaid at one per cent per month from the date commencing with the date following the last date for the payment of tax, for a period of one month and at one and a half per cent per month thereafter during the period he continues to make default in the payment: Provided that where the amount of tax not paid as required under sub-section (2A) or subsection (3) does not exceed five hundred rupees, the interest payable thereon shall not exc .....

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appellate authority is satisfied that the amount of tax assessed and the penalty and interest, if any, recoverable from the person has been paid. 43. Refund (1) The assessing authority or a person appointed to assist the Commissioner under sub-section (1) of section 3, as the case may be shall, in the prescribed manner, refund to a dealer or to any other person the amount of tax or penalty or interest paid by him in excess of the amount due from him under this Act, either by a refund voucher, o .....

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ing authority to any person by virtue of an order issued under this Act is not so refunded to him within the period as may be prescribed, the dealer shall be entitled to interest at such rates and on such terms and conditions as may be prescribed." 7. Rules 35 1(a) and (b) and 38 of the Haryana General Sales Tax Rules, 1975 in so far as they are relevant read as under:- "35 1(a) While framing the assessment of a dealer, the assessing authority shall, after such scrutiny of its record a .....

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y dealer or other person becomes payable as a result of the order of any appellate or revisional authority or any court and the same is not the subject-matter of any further proceedings, the dealer or such other person shall make an application to the assessing authority concerned alongwith the original order or the copy thereof duly attested by the dealer, which constitutes the basis for refund, the assessing authority shall order the refund of excess amount in the manner specified in clause (a .....

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if any on such refunds, specifying therein, the amount of refund, the payment of which was delayed, the period of delay for which such interest is payable and the amount of interest payable by the State Government, and shall communicate the same to the dealer to whom the interest is payable and also to the Commissioner stating briefly the reasons for the delay in allowing the refund. (2) Where an order for the payment of interest on delayed refunds under sub-rule (1) has been made, the sanctioni .....

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orders passed by certain authorities to the Tribunal. It is important to note that Section 39 (5) of the HGST Act requires an assessee to pay the amount of the tax assessed and the penalty or interest, if any, recoverable in order to have an appeal under sub section (1) entertained. Sub section (5) of Section 39 provides that no appeal shall be entertained unless the appellate authority is satisfied that the amount of tax and the penalty or interest, if any, recoverable from the person has been .....

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to a refund of such an amount as may be directed by the Appellate Authority. Absent any statutory bar, there is no justification for denying a successful assessee interest upon the amount(s) to be refunded for the period during which the revenue had the benefit thereof. The revenue suffers no loss thereby for it has enjoyed the benefit of the money during this period. It has enjoyed the benefit of the money that it was never entitled to. 9. In equity, the petitioner's claim is established. T .....

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d that there is an implied bar on the payment of interest in view of sub section (2) of Section 43. The submission is not well founded. Section 43(2) entitles an assessee to interest in certain circumstances. Sub section (1) of Section 43 merely requires the assessing authority to refund in the prescribed manner the person concerned the amount of penalty, tax or interest paid by him in excess of the amount due from him under the HGST Act either by a refund voucher or at the option of the assesse .....

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(2) with Rule 35(b). Clause (b) of sub rule (1) of Rule 35 entitles the assessee to interest at the rate specified in Section 25(5) of the HGST Act, where there is a failure to refund any amount ordered by the Appellate or Revisional Authority within ninety days of the receipt of an application by the assessee for the same. The revenue is not bound to wait for an application before refunding amounts adjudicated by the Appellate or the Revisional Authority to be due from it to any person. The rev .....

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od of the default. It is an additional benefit or safeguard and in fact a minimal guarantee to the assessee who has been kept out of his money despite an order of the Appellate or Revisional Authority and the expiry of a period of ninety days from the date of an application by the assessee for refund in accordance with the order of the Appellate or Revisional Authority. Neither Section 43, nor Rule 35(1)(b) bars the payment of interest for the period prior thereto. 12. We are invited to exercise .....

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d by the petitioner against the assessment was allowed on 11.06.1999 with the direction that the amount paid by the petitioner to the department be refunded immediately. After waiting for four months, the petitioner therein submitted an application to the assessing authority for refund of the amount. The amount was, however, not refunded. Following a judgement dated 05.09.1994 passed by the Division Bench of this Court in CWP-2372-1994 titled as Sagar Motor Company Vs State of Haryana and anothe .....

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itioner to file the writ petition for the refund alongwith interest. The Division Bench by an order and judgement dated 05.09.1994 held:- "Inspite of notice and sufficient time allowed to the respondents, they have not filed any reply. Admittedly, the appeal has been allowed and the petitioner has become entitled to the refund of the amount deposited by it. Consequently, we dispose of the writ petition with a direction to the respondents to refund the amount of penalty deposited by the peti .....

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s granted. The Court held:- "Having heard the counsel for the parties, we are satisfied that the petitioner deserves to succeed in its claim for interest. In the case of Saurabh Kumar & Bros. [2002] 127 STC 556; (2001) 18 PHT 336, this Court had noticed rule 35 of the Rules (sic) and held that if the refund is not issued with the assessment order, the department is liable to pay interest. Thus, it has been correctly claimed that the department was liable to issue refund on March 26, 200 .....

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n May 3, 1994. This order was challenged in appeal which was allowed on November 26, 1997. However, on acceptance of appeal, the amount deposited was not refunded. Since the representations of the petitioner yielded no result, the petitioner approached the High Court. The department had taken the stand that the appellate authority while cancelling the penalty on November 26, 1997 had remanded the matter to the Assessing Officer for fresh consideration. The Assessing Officer vide his order dated .....

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ner restricted his claim for interest from the date of the assessment order under which he was entitled to the refund. The petitioner did not claim interest from the date of the deposit. The Division Bench granted interest for the period claimed, but did not hold that interest is not payable from the date of the deposit. 16. M/s Khem Ram Devi Sahai Vs State of Haryana's judgement followed a decision of the Division Bench of this Court in Saurabh Kumar & Bros. Vs State of Punjab and other .....

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b General Sales Tax Act, 1948 which is not the same as the HGST Act which is involved in the case before us. Section 12(3) of the Punjab General Sales Tax Act, 1948, is, however, similar to Section 25(2) of the HGST Act and reads as under:- "12(3) Where any amount required to be refunded by the assessing authority to any person by virtue of an order issued under this Act is not refunded to him within ninety days of the date of the order, the dealer shall be entitled to get simple interest o .....

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e either, that interest is payable even for the period prior to the date of the order granting the refund. The Division Bench did not hold that interest from the date of the deposit is not payable. 17. We are, therefore, bound by the aforesaid judgements of this Court in M/s Sonu Rice Mills, Ellanabad, Sirsa Vs State of Haryana and others and Sagar Motor Company Vs State of Haryana and another. Interest is payable from the date of the deposit. 18. In this view of the matter, it is not necessary .....

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