Refund interest on sales tax deposits depends on court direction and statutory commencement date under the governing refund provision.

Interest on refundable sales tax deposits under section 14-C was to be computed by reading the court's directions with the governing statutory refund scheme. For the first deposit of Rs. 50,00,000, the earlier order required interest from the date of deposit, so the pre-amendment statutory rates of 18% for the first ninety days and 24% thereafter applied from that date. For the further deposit of Rs. 25,00,000, the later order contained no specific commencement direction, so interest ran from the date of the refund application at the same statutory rates. The refundable deposits therefore had to be recalculated accordingly.

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Issues: (i) Whether interest on the deposit of Rs. 50,00,000 was payable at the statutory rate under section 14-C of the Orissa Sales Tax Act from the date of deposit, despite no specific percentage having been fixed in the earlier court order. (ii) Whether interest on the further deposit of Rs. 25,00,000 was payable from the date of deposit or only from the date of the formal application for refund.

Issue (i): Whether interest on the deposit of Rs. 50,00,000 was payable at the statutory rate under section 14-C of the Orissa Sales Tax Act from the date of deposit, despite no specific percentage having been fixed in the earlier court order.

Analysis: The earlier direction expressly required computation of interest from the date of deposit and not from the date of the formal refund application. That direction was understood as referring to the statutory scheme then contained in section 14-C, which prescribed interest on refundable amounts at 18% for the first ninety days and 24% thereafter. Since the refundable amount was released before the amendment effective from 3 October 2000, the pre-amendment statutory rate governed the claim.

Conclusion: Interest on Rs. 50,00,000 is payable from the date of deposit at 18% for the first ninety days and 24% thereafter, in favour of the assessee.

Issue (ii): Whether interest on the further deposit of Rs. 25,00,000 was payable from the date of deposit or only from the date of the formal application for refund.

Analysis: The later court direction did not specify that interest on this amount would run from the date of deposit. In the absence of such a direction, the statutory entitlement under section 14-C applied in the ordinary manner, namely from the date of the refund application. The same statutory rates of 18% for the first ninety days and 24% thereafter were held applicable.

Conclusion: Interest on Rs. 25,00,000 is payable from the date of the formal refund application at 18% for the first ninety days and 24% thereafter, in favour of the assessee.

Final Conclusion: The interest payable on the refunded deposits had to be recalculated in accordance with the statutory formula and the different commencement dates fixed by the two court orders, resulting in relief to the petitioners.

Ratio Decidendi: Where a court order directs payment of interest on a refundable tax deposit, the commencement date and applicable statutory rate must be determined by the terms of that order read with the governing refund provision; in the absence of a specific direction for the later deposit, interest runs from the date prescribed by the statute for refund claims.

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