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HYBRID FINANCIAL SERVICE LTD. & 1 Versus STATE OF GUJARAT & 1

2016 (2) TMI 612 - GUJARAT HIGH COURT

Claim of interest of on Refund of sales tax / vat which was paid under protest - earlier Apex court clarified that if lease is executed in one State but the goods are situated in another State, no local tax was payable in the state - Held that:- Such refund was actually paid to the petitioners alongwith partial interest. When the petitioners demanded interest for the full period, the authority conveyed to the petitioners that by virtue of the judgement of Supreme Court in case of Mafatlal Indust .....

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nity to the petitioner. Even more importantly, the claim of interest is statutorily recognized under Section 54 of the Sales Tax Act and flows from the petitioners' right to seek refund. The authority who himself granted such refund, now questions the legality and validity of his own order. He did not have any power of review. The revision authority has not yet taken his order in revision. The Assistant Commissioner of Commercial Tax, therefore, had no authority to question his own order of gran .....

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DVOCATE FOR THE RESPONDENT : MR PRANAV TRIVEDI, AGP (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioners have challenged an order dated 30.10.2015 passed by the Assistant Commissioner of Commercial Tax, a copy of which is produced at Annexure A to the petition. 2. Brief facts are as under: Petitioner No.1 is a company registered under the Companies Act. Petitioner No.2 is the office bearer. Petitioners are engaged in the business of leasing goods, including electric meters in the State of G .....

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er protest on the lease agreements outside the State of Gujarat. The situation, however, was clarified by the Supreme Court in case of 20 th Century Finance Corporation Ltd. vs. State of Maharastra (2000) 119 STC 182 (SC). By virtue of such decision, the petitioners became entitled to refund of the tax so collected by the department and paid by the petitioners under protest. Under such background, the Gujarat Value Added Tax Tribunal allowed the petitioners' two appeals and set aside the ass .....

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ners' appeal by an order dated 21.08.2009. 4. Against this judgement of the Tribunal, in one of the two appeal proceedings, the department preferred rectification application before the Tribunal itself which came to be dismissed on 07.03.2013. 5. On the basis of such judgements of the appellate authority and the Tribunal, the competent authority also granted refund to the petitioners under three separate orders, all passed on 26.09.2014. Though these refund orders do not mention the computat .....

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of the Tribunal on rectification application of the department and, in third case, such interest was computed from 18.03.2013 i.e. the date of the judgement of the first appellate authority. The case of the petitioners is that the refund should carry interest for the entire period from the date of the deposit of the tax till actual payment in terms of Section 54(1) of the Sales Tax Act. 6. When the petitioners approached the competent authority for such further interest, such request, came to be .....

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judgement in the case of Mafatlal Industries you are not eligible to get refund as it amounts to unjust enrichment so the question of interest on refund does not arise. In your case refund is wrongly paid to you which is the subject matter of review proceedings or dependent upon the decision of Hon'ble High Court of Gujarat in SCA No. 13353 of 2015. The above contention regarding the unjust enrichment is brought to the kind notice of Hon'ble High Court of Gujarat in the affidavit filed b .....

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r interest on refund is hereby rejected. The authority further stated that even the refund already paid alongwith interest is recoverable. Inter alia on such grounds, the application of the petitioners came to be dismissed. 7. Having heard learned counsel for the parties and having perused the documents on record, in our opinion, the competent authority has committed a serious error in rejecting the application of the petitioners for interest. As noted, the petitioners succeeded before the Tribu .....

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