Illegal tax interest recovery and refund: writ remedy remains available despite civil suit and delay objections.

Interest collected on sales tax liabilities under the Central Sales Tax framework was unsustainable after the Supreme Court clarified that it was not leviable in that manner, and the amounts recovered were liable to be refunded. The writ remedy was treated as maintainable despite the availability of a civil suit because the assessment orders had attained departmental finality and only writ jurisdiction could undo the illegality in the assessment process. The delay objection was not accepted in the circumstances, and the challenge to the unlawful recovery was allowed to proceed to refund.

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Issues: (i) Whether interest collected on sales tax liabilities under the Central Sales Tax Act could be recovered when the legal position declared by the Supreme Court showed such interest not to be leviable in that manner; (ii) whether a writ petition seeking refund of the amounts illegally collected was maintainable notwithstanding the availability of a civil suit and the lapse of time after the assessment orders.

Issue (i): Whether interest collected on sales tax liabilities under the Central Sales Tax Act could be recovered when the legal position declared by the Supreme Court showed such interest not to be leviable in that manner.

Analysis: The assessment and appellate orders had been made on an erroneous understanding of the law later clarified by the Supreme Court. Once the legal position was settled, the collection of interest under the Central sales tax framework on transactions governed by State sales tax laws could not stand.

Conclusion: The levy and collection of interest were unsustainable and the amounts recovered were liable to be refunded.

Issue (ii): Whether a writ petition seeking refund of the amounts illegally collected was maintainable notwithstanding the availability of a civil suit and the lapse of time after the assessment orders.

Analysis: Although refund claims are ordinarily pursued in a suit, that remedy would be ineffective where the assessment orders had attained departmental finality and only writ jurisdiction could undo the illegality in the assessment process. The delay was not treated as inordinate, and the lapse of time was excused in the circumstances.

Conclusion: The writ petition was maintainable and the objections based on alternative remedy and delay were rejected.

Final Conclusion: The petitioner succeeded in obtaining quashing of the unlawful recovery and a direction for refund of the collected sums, with no order as to costs.

Ratio Decidendi: When a tax or interest levy is shown to be legally unsustainable and the underlying assessment has attained departmental finality, writ jurisdiction may be invoked to set aside the illegality and secure refund, even if a civil suit would ordinarily lie.

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