Right to refund after penalty quashed cannot be withheld merely because revision proceedings are under consideration.

An appellate order setting aside a penalty and directing refund created an enforceable right to restitution in favour of the dealer. A refund could not be withheld merely because suo motu revision proceedings were under consideration, especially when no revision order was then in force. The refusal to refund was therefore unsustainable, and the dealer was entitled to refund with interest as permissible in law.

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Issues: Whether the refund of penalty collected from the dealer could be withheld on the ground that suo motu proceedings were under consideration, despite an appellate order quashing the penalty and directing refund.

Analysis: The appellate authority had already allowed the dealer's appeal, set aside the penalty imposed under section 28-A(4) of the Karnataka Sales Tax Act, 1957, and directed refund of the collected amount. Once such an order existed, the dealer acquired a right to refund. The respondent's endorsement declining refund merely because suo motu revision proceedings were being considered was held to be unsustainable, particularly when no revision order was in force.

Conclusion: The refusal to refund was unlawful. The petitioner was entitled to refund with interest as permissible in law, and the writ petition succeeded.

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