Statutory interest on refundable tax and security deposits runs despite delayed consequential orders or withheld refund processing.

Where tax or deposit amounts are found refundable, statutory interest cannot be withheld merely because consequential orders are delayed or the appellate order is said not to have been communicated. The Kerala High Court treated refund entitlement under the sales tax law as carrying a duty to give effect within the prescribed period, so interest on excess tax became payable after expiry of 90 days from the appellate order. It also applied the same compensatory principle to a refundable security deposit, holding that interest ran from the date the refund claim was made and could not be denied while the Revenue retained money found due to the assessee.

---

---

Issues: (i) Whether the assessee was entitled to interest on the excess tax refunded under the modified assessment from the expiry of 90 days after the appellate order. (ii) Whether the assessee was entitled to interest on the refundable security deposit from the date of the refund request.

Issue (i): Whether the assessee was entitled to interest on the excess tax refunded under the modified assessment from the expiry of 90 days after the appellate order.

Analysis: The entitlement to refund under section 44 of the Kerala General Sales Tax Act, 1963 was treated as carrying with it the obligation to give consequential effect within 90 days. The Court held that the assessee cannot be denied statutory interest merely because the assessing authority had not passed the modified order or claimed non-communication of the appellate order. Since the amount represented the assessee's money retained by the Revenue after it was found not due, interest became payable after expiry of the 90-day period.

Conclusion: The assessee was entitled to interest under section 44(4) from the expiry of 90 days from 21 March 1985 on the excess tax amount.

Issue (ii): Whether the assessee was entitled to interest on the refundable security deposit from the date of the refund request.

Analysis: The security deposit had already been found refundable, and the Revenue could not retain the amount without compensating the assessee. The Court applied the principle that the State cannot unjustly enrich itself by withholding money found payable to the assessee, and directed interest at the statutory rate from the date of the refund request produced in the writ petition.

Conclusion: The assessee was entitled to interest at 10 per cent under section 44(4) on the security deposit of Rs. 18,080 from 16 June 1998.

Final Conclusion: The writ petition was allowed in substance by directing payment of statutory interest on both the excess tax refund and the security deposit, with disbursement within the time fixed by the Court.

Ratio Decidendi: Where tax or deposit amounts are found refundable, the Revenue cannot postpone statutory interest by delaying consequential orders or withholding communication, and interest runs from the expiry of the statutory period or from the date the refund claim is made, as the case may be.

---