Delayed sales tax refund carried interest once the statutory refund period expired and no recoverable demand subsisted.

Interest became payable on a delayed sales tax refund once the refund application was not decided within the sixty-day period prescribed by the Haryana General Sales Tax Rules, 1975. Pending assessment proceedings did not justify continued retention of the refund amount where no subsisting demand was recoverable against the assessee during the relevant period. Applying section 25(5) of the Haryana General Sales Tax Act, 1973, the court held that expiry of the statutory period triggered the right to interest. The rejection of the assessee's claim for interest was therefore unsustainable.

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Issues: Whether the assessee was entitled to interest on the delayed refund under rule 35(1)(b) of the Haryana General Sales Tax Rules, 1975 read with section 25(5) of the Haryana General Sales Tax Act, 1973.

Analysis: The refund application was required to be decided within sixty days under the Rules. The amount remained withheld beyond that period even though no demand was recoverable against the assessee during the relevant time. The existence of pending assessment proceedings did not authorise retention of the amount in the absence of a subsisting demand. Once the statutory period expired, interest became payable in accordance with section 25(5).

Conclusion: The assessee was entitled to interest on the delayed refund, and the order rejecting the claim was unsustainable.

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