Reasoned refund withholding and statutory interest: delayed VAT refund attracts interest, and writ relief can still lie against a defective order.

Refund under the Haryana Value Added Tax Act can be withheld only by a reasoned written order showing the statutory conditions for adverse impact on recovery; a mechanical order stating that proceedings are pending is unsustainable and liable to be set aside. Where refund is not issued within the prescribed period under the refund provisions and rule 41(4), statutory interest at one per cent per month accrues from the expiry of sixty days after the assessment order until payment. The availability of an appeal does not bar writ relief against a jurisdictionally defective, non-speaking order contrary to natural justice, so the refund and interest were directed to be released.

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Issues: (i) Whether the order withholding refund under section 21 of the Haryana Value Added Tax Act, 2003 was sustainable; (ii) whether the petitioner was entitled to refund with interest despite the availability of statutory remedies.

Issue (i): Whether the order withholding refund under section 21 of the Haryana Value Added Tax Act, 2003 was sustainable.

Analysis: Section 21 permits withholding of refund only where the order giving rise to refund is subject to further proceedings and the authority records reasons in writing showing that grant of refund is likely to adversely affect recovery. The impugned order merely stated that the refund was subject to further proceedings and that recovery would be adversely affected, but it disclosed no reasons, no material basis, and no independent application of mind. The statutory scheme also contemplates three distinct courses before the Commissioner, including release of refund on security or refusal to withhold it, which reinforces the need for a reasoned decision. The absence of reasons rendered the order mechanical and unsustainable.

Conclusion: The withholding order was invalid and was set aside.

Issue (ii): Whether the petitioner was entitled to refund with interest despite the availability of statutory remedies.

Analysis: Under section 20 and rule 41(4), refund was required to be issued within the prescribed period and, on delay beyond sixty days, interest at one per cent per month became payable. The assessment had already resulted in a refundable amount, and the respondents did not effectively dispute the factual basis showing that recovery would not be jeopardized. The challenge was maintainable in writ jurisdiction because the action complained of was without proper jurisdiction and contrary to natural justice, so the existence of appeal remedies did not bar relief. The delay in releasing the refund attracted statutory interest from the expiry of sixty days after the assessment order.

Conclusion: The petitioner was entitled to refund of the amount along with interest at one per cent per month from the expiry of sixty days after the assessment order until payment.

Final Conclusion: The writ petition succeeded, the withholding of refund was quashed, and the respondents were directed to release the refund with statutory interest.

Ratio Decidendi: Refund can be withheld only by a reasoned order recorded in writing under the statutory conditions, and where refund is unlawfully delayed beyond the prescribed period, interest follows as a statutory consequence; the existence of an alternative remedy does not bar writ relief against a jurisdictionally defective and non-speaking order.

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