Refund of penalty amount with interest and token costs upheld after penalty order was set aside in appeal.

Refund of a penalty amount was due after the appellate authority set aside the penalty order and the department did not challenge that decision. Continued retention of the amount for more than 11 years was arbitrary and unjustified, so the amount had to be refunded within a reasonable time. On the undisputed facts, interest was payable on the refunded amount under section 12(3) of the Punjab General Sales Tax Act, 1948, and the respondents' conduct also justified an award of costs, though only token costs were granted.

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Issues: Whether the petitioner was entitled to refund of the penalty amount with interest and costs after the appellate authority had set aside the penalty order.

Analysis: The penalty imposed under section 14-B of the Punjab General Sales Tax Act, 1948 had been set aside in appeal and the department had not challenged that order. The refund, therefore, ought to have been made within a reasonable time. Retention of the amount for more than 11 years was arbitrary and unjustified. In view of section 12(3) of the Act, the respondents were liable to pay interest on the refunded amount. The conduct of the respondents also justified an award of costs, though only token costs were granted.

Conclusion: The petitioner was held entitled to refund, interest, and costs.

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