Old is Gold on Tamil Nadu General Sales Tax

As you all are kindly aware, history is more important. In the State of Tamil Nadu, the law relating to sale on goods referred in general as Sales Tax was covered as under.

As we are almost crossing the year 2026, ideally we should handle only GST. I was surprised when I was contacted to handle a few matters relating to Tamil Nadu General Sales Tax Act, 1959 with huge stake involved during February 2026. Honestly, I do have very little exposure to that Act as during the period from 01/05/2003 till now, my entire area of focus was only on Service Tax as well as GST. Though I handled few matters on Central Excise as well as Customs, that was hardly 10%. Be that as it may, I never handled even a single case on the Tamil Nadu General Sales Tax Act 1959. Still I happily accepted the assignment and started working on it from day one. The issue was implementation of the orders passed by the Tamil Nadu Sales Tax Appellate Tribunal during July 2025 on matters pertaining to the periods prior to 01/01/2007. We were expected to have closed cases on TNVAT as on date as that law is not in force during the last 9 years but cases are live for earlier periods as well due to the huge time taken while travelling from SCN to OIO to OIA to Tribunal. That is why CESTAT is fully active, despite lesser applicability of the Central Excise Act in India.

The client handed over to me few orders passed by Tribunal on sales tax matters and the core issue was implementation of the order by the jurisdictional proper officer. The client had waited till February 2026 to monitor as to whether the department is preferring any appeal before Madras High Court. I started the work on the day one on receipt of Tribunal order and my entire focus was to ensure refund of the tax involved arising out of the Tribunal orders. We all are aware of the mindset of the tax officers when it is the issue of refund of tax. I am based at Chennai and the authority concerned to issue refund was at Trichy and I had to travel from Chennai to Trichy at least 15 times during February 2026 till October 2026 to start the ball rolling.

On 17/03/2026, the concerned Assistant Commissioner informed me not to contact them till 08/05/2026 due to procedures on Tamil Nadu State Assembly Elections. Rigorous follow up started again from 09/05/2026 and as on 15/09/2026, I realized that out of ten orders due to me, not even a single order was passed. Till then I was insisting only on refund of 100 % of the taxes alone, as this itself was a herculean task. But as there was no progress, I did not have sleep for one full night and on that day I was literally doing legal research on the orders passed by the Madras High Court on identical circumstances. I was lucky to notice an order passed by the High Court in Chitrahar Traders Versus The Assistant Commissioner (CT), The State of Tamil Nadu - 2019 (11) TMI 170 - MADRAS HIGH COURT. This HC order categorically states that interest is not payable during the first 90 days from the date of the Tribunal order. As the Tribunal orders were dated July 2025 and as almost one year is covered as the applicable period for covering interest, I read section 24 (4) of the relevant act . The provisions of Section 24(4) of the Tamil Nadu General Sales Tax Act read thus:

'Section 24(4) : 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 of such amount for each month or part thereof after the expiry of the said period of ninety days.

I concluded that the battle is already won and furnished relevant extracts of the above case law with a copy of the High Court order to the concerned Assistant Commissioner, Deputy Commissioner as well as the Joint Commissioner, who is heading the Trichy operations. The speed at which the ball was moving has accelerated and the first order was released on 01/10/2026. But no progress till 31/10/2026. I took a stand that as stake involved is huge, unless 100% of taxes are refunded before 31/12/2026, we may be constrained to claim interest as well, the department has come forward to settle 100 % of applicable refunds of taxes before 31/12/2026 and the second order was passed on 03/11/2026.

Take aways: The message is very loud and clear. All taxpayers, all over the State of Tamil Nadu are entitled for applicable interest from 91st day of Tribunal order till the date actual refund order. The research which I did during the last 45 days on the above issue must yield desired benefits to the entire State of Tamil Nadu and it has already solved my client issues.