VAT Refund cannot be withheld due to CST proceedings: Calcutta HC Orders VAT Refund with Interest [Read Order]

The Calcutta High Court (HC) ordered to refund of excess tax paid under the West Bengal Value Added Tax Act,WBVAT Act with intereston the aspect that the refund of Value Added Tax (VAT) cannot be withheld due to CST proceedings.

The Mobile Store Limited, the appellant filed the writ petition for a direction upon the respondents to refund the amount of excess tax paid by the appellant as accepted by the department in Form – 27.  The department did not refund the excess tax.

The petitioner approached the West Bengal Taxation Tribunal with a prayer to issue a writ of mandamus to direct the department to refund the said amount.  Before the Tribunal, the State made an oral submission that the appellant is due and payable a sum of Rs.1,22,55,623.45 being dues under the WBVAT Act as well as CST Act and an interest thereon of Rs.96,99,566/-.

There wasno affidavit or document which can show how the amount was due and payable, whether an assessment order had been passed and on what date the order was passed and when it was served on the appellant etc. 

The Single Bench had dismissed the writ petition holding that the appellant ought to have withdrawn the matter before the Tribunal and without doing so if the writ petition is to be taken up for consideration, it would be tantamount to parallel remedies being invoked and would render the proceedings before the Tribunal as infructuous.

It was evident that the appellant cannot withdraw the proceedings before the Tribunal because the Tribunal is not functional on account of lack of quorum and the Tribunal had not taken any final decision in the matter.

Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya observed that there was nothing on record to show that the demand was pending before the issuance of the refund order in Form – 27 or after the said order. 

The Court held that after the issuance of Form – 27 in which it has been recorded that the appellant had paid excess tax, the department must refund the said amount and if the amount is not refunded within time, the appellant/assessee would be entitled to interest on the same as the department seeks to recover alleged tax dues with interest. 

While allowing the petition, the Court set aside the order and directed the respondents to refund the sum of Rs.1,64,22,581.16 together with statutory interest till the date of actual payment.

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