Refund of excess input tax cannot be withheld merely because an assessment audit is pending.

A 100% export oriented unit was found entitled to refund of excess input tax where the Department had already ed both eligibility and quantum, and withholding the refund only pending audit of the assessment year was held contrary to the Karnataka VAT refund provisions. The Court treated the audit pendency as no valid ground to deny refund on admitted facts, and the endorsement refusing refund was quashed.

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Issues: Whether the petitioner was entitled to refund of excess input tax without waiting for audit of the assessment year 2012-13, and whether the endorsement refusing refund was sustainable.

Analysis: The petitioner was a 100% export oriented unit and, on the admitted facts, the eligibility for refund as well as the quantum of excess tax paid stood accepted by the Department. The only reason for withholding refund was that the assessment had to be audited first. The Court held that this reason was not in consonance with the refund provisions under the Karnataka Value Added Tax regime and that the endorsement was contrary to the governing rules.

Conclusion: The petitioner was held entitled to refund of the excess input tax, and the impugned endorsement was quashed.

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