Statutory interest on wrongfully withheld sales tax deposit granted after appellate relief

After the appellate orders set aside the original sales tax demand, the respondents had no basis to retain the assessee's deposited amount. The court held that wrongful withholding of the sum attracted statutory interest for the period from the date the appeals were allowed until payment, in accordance with the applicable rules. As the principal amount had already been refunded before the writ petition was decided, no further refund direction was necessary.

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Issues: Whether the assessee was entitled to interest on the amount deposited under the sales tax proceedings and retained by the respondents after the appeals had been allowed.

Analysis: The amount deposited by the assessee had already been refunded before the writ petition was decided. The remaining question was whether the respondents could withhold the amount after the appellate orders had set aside the original demand and whether interest was payable for the period of such withholding. Since the respondents could not justify retention of the amount after acceptance of the appeals, the assessee became entitled to statutory interest on the sum wrongly withheld, in accordance with the applicable rules, for the period from the date the appeals were allowed until payment.

Conclusion: The assessee was held entitled to statutory interest on the amount wrongfully withheld, but no further direction for refund was necessary as the principal amount had already been returned.

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