Tax refund cannot be withheld without pending proceedings or revenue risk; interest also applies on the quantified refund.

Refund of excess tax could not be withheld in the absence of pending proceedings under the Act or any recorded risk to the revenue. A contemplated or uninitiated revisional action was not a sufficient basis to retain the quantified amount. The court further recognised interest on the refund under Section 50 of the Karnataka Value Added Tax Act, 2003. The assessee was held entitled to refund with interest, and the authorities were directed to make payment within two weeks.

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Issues: Whether the assessee was entitled to refund of excess tax already determined, together with interest, and whether the refund could be withheld in the absence of pending proceedings or any shown risk to the revenue.

Analysis: The refund had been quantified in the re-revised notice, and the amount remained unpaid. The Court applied the principle that refund to an assessee can be withheld only where proceedings under the Act are pending or where the authority forms an opinion that granting refund is likely to adversely affect the revenue. A contemplated or uninitiated revisional action was held to be no ground to retain the amount. The claim for interest was considered under Section 50 of the Karnataka Value Added Tax Act, 2003.

Conclusion: The assessee was held entitled to refund of Rs. 1,06,89,301/- together with interest at 6% per annum under Section 50 of the Karnataka Value Added Tax Act, 2003, and the authorities were directed to make payment within two weeks.

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