In the recent case M/s .A. Rangasamy Engineers (Pvt.)Ltd v. CTO, the Madras High Court held that the assessee is entitled to interest for delayed payment of refund in case of excess payment of tax.
While dismissing the order of the assessing officer, Justice Vaidyanathan said that, section 24(4)of the Tamil Nadu General Sales Tax Act, 1959 provides for interest on delayed refund even if the assessee had not made a separate claim for the same.
The petitioner-Company approached the High Court through a Writ petition challenging the action of the VAT officials who delayed the payment of refund entitled to them. Petitioners claimed that as per the appellate orders, the original orders were revised and the excess payment of tax was shown as refund. It was submitted that the excess payment of tax, has not been refunded to the petitioner. Hence, the petitioner seeks to refund the excess amount with interest.
For the Revenue, it was contended that the petitioner has sought only refund of the excess amount lying with the respondent and not interest.
The Court analyzed the provisions of Section 24-(4) of the Tamil Nadu General Sales Tax Act, 1959, which says that,
“Where the tax paid under this Act is found to be in excess on final assessment or revision of assessment, or as a result of an order passed in appeal, revision or review, the excess amount shall be refunded to the dealer after adjustment of arrears of tax, if any, due from him. Where the excess amount is not refunded to the dealer within a period of ninety days (from the date of the order of assessment or revision of assessment and in the case of order passed in appeal, revision or review, within a period of ninety days from the date of receipt of the order), the Government shall pay by way of interest, where the amount refundable is not less than one hundred rupees, a sum equal to a sum calculated at the rate of one per cent or part thereof such amount for each month or part thereof after the expiry of the said period of ninety days.”
In the light of the above provision, the bench said that the petitioner is entitled to interest for the delayed payment of refund and the impugned order is liable to be quashed.
Read the full text of the Judgment below.
