Interest on withheld sales tax refund runs from six months after the withholding order until actual payment under refund provisions.

Interest on a sales tax refund withheld during further proceedings was held payable under the refund provisions of the Andhra Pradesh General Sales Tax Act, 1957. The refund became due after the appellate order, but the revenue could validly withhold payment under the statutory withholding power while proceedings continued. Reading the refund and interest provisions together, the court treated the withholding order as the operative reference point and held that interest runs on the amount ultimately found refundable from the day after expiry of six months from that order until actual payment. The assessee was therefore entitled to interest at 12% per annum for that period.

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Issues: Entitlement to interest on a sales tax refund withheld during proceedings and the date from which such interest becomes payable under the refund provisions of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: Refund became due upon the appellate order, but the revenue was entitled to withhold it under the statutory power corresponding to section 33C while further proceedings were pending. Reading the refund and interest provisions together, where refund is withheld under that provision and is ultimately found payable after further appeal, interest is payable on the amount ultimately determined to be due from the date immediately after the expiry of six months from the withholding order until the refund is actually granted. The court therefore treated the withholding order as the relevant starting point for computing interest and rejected the contention that no order under the withholding provision had been shown as a bar to relief.

Conclusion: The assessee was held entitled to interest at 12% per annum on the refund amount for the relevant period, computed from the expiry of six months after the withholding order until payment of the refund.

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