Statutory refund may be withheld during pending proceedings, but delayed payment after it becomes due attracts statutory interest.

Statutory sales tax refund may be withheld while appeal or connected proceedings remain pending if the competent authority has approved withholding under the relevant provision and release would prejudice revenue. Immediate refund is therefore unavailable until the pending proceedings are finalised and the refund becomes payable under the statutory scheme. Once the amount is due, failure to pay within the prescribed period attracts statutory interest on the delayed refund.

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Issues: Whether the petitioner was entitled to immediate refund of the excess tax found refundable under the Act despite an order withholding refund under section 33-C, and whether interest was payable on any delayed refund.

Analysis: The refund claim was governed by the statutory scheme under section 33 and rule 35, which require refund of excess tax after appeal or revision is given effect to, but that entitlement is subject to the withholding power under section 33-C where proceedings are pending and refund is likely to adversely affect revenue, with previous approval of the Deputy Commissioner. The refund could therefore be withheld until the pending appeal and consequential proceedings were finalised. Once the amount becomes payable and is not paid within the stipulated period, section 33-E provides for interest on the delayed refund.

Conclusion: The withholding order under section 33-C was valid, so immediate refund was not available to the petitioner. The petitioner was, however, entitled to refund after giving effect to that order, and interest would follow under section 33-E if the refundable amount remained unpaid beyond the prescribed period.

Ratio Decidendi: A statutory refund under the sales tax law may be validly withheld where appeal or other proceedings are pending and the competent authority has approved withholding under the relevant provision, but delayed payment of the amount payable attracts statutory interest.

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