Delayed sales tax refund attracts statutory interest once only the balance remains payable after adjustment of outstanding demand.

Refund of sales tax became payable once assessment was finalised and, after adjustment of the admitted outstanding demand, only the balance remained due to the assessee. Rule 35 of the Haryana General Sales Tax Rules, 1975 permits adjustment only where some amount is still outstanding from the assessee; once no further amount remains due, the assessing authority must direct refund without requiring any option from the assessee. As the department failed to refund the balance promptly and payment was made only after the writ petition was filed, statutory interest accrued on the delayed refund under section 25 of the Haryana General Sales Tax Act, 1973 from the date the refund became due until actual payment. The direction to pay interest was upheld.

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Issues: Whether the assessee was entitled to interest on the delayed refund of sales tax once the amount refundable exceeded the outstanding demand.

Analysis: The refund became due when the assessment was finalised and, after adjustment of the admitted outstanding demand, the balance amount had to be refunded immediately. Rule 35 of the Haryana General Sales Tax Rules, 1975 contemplates adjustment only where some amount remains due from the assessee; where no further amount is outstanding, the assessing authority must direct refund and no option by the assessee is necessary. Since the department failed to refund the balance promptly and the amount was paid only after the writ petition was filed, the delay attracted statutory interest under section 25 of the Haryana General Sales Tax Act, 1973 from the date the refund became due till actual payment.

Conclusion: The assessee was entitled to interest on the delayed refund, and the direction to pay interest was upheld in favour of the assessee.

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