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Issues: (i) Whether the assessee was entitled to interest on the refundable sum of Rs. 9,825.50 under the sales tax enactments; and (ii) whether interest could be awarded on the refundable entry tax amount of Rs. 49,921.74 despite the absence of an express statutory provision.
Issue (i): Whether the assessee was entitled to interest on the refundable sum of Rs. 9,825.50 under the sales tax enactments.
Analysis: The refund arose out of assessments that stood set aside after the levy was held to be impermissible. The relevant refund provisions, namely section 10B of the Bengal Finance (Sales Tax) Act, 1941 and section 8B of the West Bengal Sales Tax Act, 1954, provided for simple interest at the prescribed rate on delayed refund of excess tax paid. Since the amount had remained unpaid, the statutory consequence of delayed refund applied.
Conclusion: The assessee was entitled to refund of Rs. 9,825.50 with interest in accordance with the applicable statutory provision.
Issue (ii): Whether interest could be awarded on the refundable entry tax amount of Rs. 49,921.74 despite the absence of an express statutory provision.
Analysis: Although there was no express provision under the entry tax law for payment of interest, the amount had been retained by the Government for a long period after the levy itself was held illegal. The retention of money without authority justified compensation for the benefit wrongly enjoyed by the State, and interest was awarded from the date of the trial court's judgment until refund at the rate fixed by the Court.
Conclusion: The assessee was entitled to interest on Rs. 49,921.74 at 12 per cent per annum from 11 June 1985 until refund.
Final Conclusion: The application succeeded in part, with statutory interest granted on the sales tax refund and equitable interest granted on the entry tax refund.
Ratio Decidendi: Where refund of illegally collected tax is statutorily governed, interest follows the refund provisions; where no express statutory provision exists, interest may still be awarded as compensation for wrongful retention of the assessee's money.
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