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Issues: (i) Whether the Tribunal was justified in directing refund of Rs. 44,683 being Central sales tax collected from customers; (ii) whether interest on tax payable on inter-State sales to the Canteen Stores Department was chargeable only from 25 May 1983 in view of a bona fide dispute as to taxability.
Issue (i): Whether the Tribunal was justified in directing refund of Rs. 44,683 being Central sales tax collected from customers.
Analysis: The question on refund was treated as covered by the decision rendered in the connected revisions decided the same day. The Tribunal's view on the refund was therefore not shown to suffer from any legal infirmity requiring interference in revision.
Conclusion: The refund direction was upheld.
Issue (ii): Whether interest on tax payable on inter-State sales to the Canteen Stores Department was chargeable only from 25 May 1983 in view of a bona fide dispute as to taxability.
Analysis: The Tribunal had found that the assessee was raising a bona fide dispute regarding taxability up to 25 May 1983 and had not admitted liability before that date. On that footing, and applying the principle that interest does not arise until liability is admitted or determined where a bona fide dispute subsists, the Tribunal's denial of interest for the earlier period was consistent with the settled law.
Conclusion: The Tribunal's view that no interest was payable up to 25 May 1983 was sustained.
Final Conclusion: No ground for revisional interference was made out, and the revision failed.
Ratio Decidendi: Where taxability is bona fide disputed and liability is not admitted for the relevant period, interest on the tax does not become payable until the dispute is resolved or liability is acknowledged.
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