Refund interest follows the VAT regime rate where an appellate assessment correction triggers the refund.

Refund interest was payable on tax refunded after appellate modification of the assessment, because the appellate order merely gave the assessment its correct legal shape and did not create a separate basis for treating the refund claim as arising from a different order. However, because the Gujarat Value Added Tax Act, 2003 had commenced and the refund claim fell within that regime's timing, the higher rate under the repealed sales tax law was unavailable. Interest was therefore allowable only at the VAT rate of 6% per annum, not 9% per annum.

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Issues: Whether the petitioner was entitled to interest on the refunded tax amount, and if so, whether the applicable rate was 9% under section 54 of the Gujarat Sales Tax Act, 1969 or 6% under section 38 of the Gujarat Value Added Tax Act, 2003.

Analysis: The refund arose after the assessment order was modified in appeal, and the appellate order merely corrected the assessment by giving it its proper legal shape. On that basis, the claim for refund could not be treated as arising from an order other than the assessment order for the purpose of delayed refund interest. At the same time, the court held that, in view of the commencement of the Gujarat Value Added Tax Act, 2003 and the relevant timing of the refund claim, interest could not be awarded at the higher rate under the repealed sales tax regime, but only at the rate prescribed under the VAT regime.

Conclusion: The petitioner was entitled to interest, but only at 6% per annum and not at 9% per annum.

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