Delayed tax refund after assessment is set aside carries mandatory interest under the Punjab General Sales Tax framework.

Where an assessment was quashed, the tax deposit became refundable and there was no legal basis to retain it. The Punjab and Haryana High Court noted that Section 12(3) of the Punjab General Sales Tax Act, 1948 mandates simple interest if a refundable amount is not returned within ninety days of the refund order, and Rule 50 of the Punjab General Sales Tax Rules, 1949 requires the refunding authority to record and communicate the interest payable. As the delay was not attributable to the assessee, interest on the delayed refund was held to be mandatory.

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Issues: Whether the assessee was entitled to interest on the delayed refund of tax deposited after the assessment order was set aside.

Analysis: The amount deposited by the assessee became refundable once the assessment was quashed, and there was no legal authority shown for withholding the refund. Section 12(3) of the Punjab General Sales Tax Act, 1948 provides for simple interest where a refundable amount is not returned within ninety days of the refund order, and Rule 50 of the Punjab General Sales Tax Rules, 1949 requires the authority issuing the refund order to record and communicate the interest payable. The delay in refund was not attributable to the assessee, and the statutory provisions made payment of interest mandatory on delayed refund.

Conclusion: The assessee was entitled to interest on the delayed refund under Section 12(3) of the Punjab General Sales Tax Act, 1948 and Rule 50 of the Punjab General Sales Tax Rules, 1949.

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