Compulsory tax deposit for appeal does not bar refund interest when money is retained by the Revenue beyond lawful repayment time.

Compulsory deposit of tax as a precondition for maintaining a statutory appeal does not bar interest on the refunded amount when the assessee ultimately succeeds. Under the Haryana General Sales Tax Act and Rules, the refund and delayed-refund provisions did not exclude interest for the period during which the Revenue retained money paid under compulsion; they only governed interest after the appellate or revisional order and the prescribed refund period. Applying prior binding precedent, the HC held that interest accrued from the dates of deposit until actual payment, and the assessee was awarded interest at 12% per annum on the refund.

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Issues: Whether an assessee who was compelled to deposit tax as a precondition for maintaining the statutory appeal is entitled to interest on the refunded amount from the dates of deposit till actual payment.

Analysis: The refund and interest scheme under the Haryana General Sales Tax Act, 1973 and the Haryana General Sales Tax Rules, 1975 does not create any express or implied bar against interest for the period during which the Revenue retained the assessee's money. Section 39(5) required payment of the assessed amount for the appeal to be entertained, and once the assessee succeeded, the Revenue was bound to refund the amount. Section 43(2) and Rule 35(1)(b) only deal with interest in specified delayed-refund situations after the appellate or revisional order and the prescribed period. They do not exclude interest for the earlier period when the tax remained with the State. Binding decisions of this Court had already held that where a taxpayer is kept out of money paid under compulsion and later found refundable, interest follows from the date of deposit.

Conclusion: The assessee was entitled to interest at 12% per annum from the dates of deposit until payment, and the impugned order was modified accordingly in favour of the assessee.

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