Refund of local sales tax on declared goods sold inter-State was payable, with interest for delayed processing.

Declared goods sold later in inter-State trade were eligible for reimbursement of local sales tax under Rule 27-A once the statutory conditions were met. The assessment records showed the purchases were treated as second purchases, exemption had been granted on the local purchase turnover, and Central sales tax had been paid on the inter-State sales; the refund applications were also filed in the prescribed form within time. Rule 27-A required disposal within three months, so continued withholding of the refund for years without further need for verification was inconsistent with the rule. Refund of the local sales tax on the specified turnover was therefore payable with interest at 12% per annum from 1 November 1986 until payment.

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Issues: Whether the petitioner was entitled to refund of local sales tax collected on declared goods that were subsequently sold in inter-State trade under Rule 27-A of the Andhra Pradesh General Sales Tax Rules, and whether the delay in processing the refund justified withholding the amount and interest.

Analysis: The goods in question were declared goods and the local tax had been levied only on the first purchase stage. The assessment records showed that the petitioner's purchases were treated as second purchases and exemption was granted on the local purchase turnover. The petitioner had paid Central sales tax on the inter-State sales and had filed the refund applications in the prescribed form within time. Rule 27-A required reimbursement of tax and surcharge once the conditions were satisfied, and mandated disposal of the application within three months of receipt. The continued withholding of the refund for years, despite the admitted facts and absence of any further necessity for prolonged verification, was inconsistent with the rule.

Conclusion: The petitioner was entitled to refund of the local sales tax collected on the specified turnover, together with interest at 12% per annum from 1 November 1986 until payment.

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