KVAT refund claims must be considered with interest, subject to adjustment of dues from pending assessment.

Kerala HC addressed a refund claim for excess KVAT paid and held that the representation had to be considered within a fixed time. The refund was to be computed with up-to-date interest under Section 89 of the Kerala Value Added Tax Act, but any amount found due on finalisation of the pending assessment for the relevant year had to be adjusted first. Only the balance remaining after lawful set-off of assessment dues was to be released to the petitioner. The article thus highlights timely disposal of refund claims, statutory interest on refundable tax, and adjustment of refund against outstanding liabilities.

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Issues: Whether the petitioner was entitled to a direction for consideration of the refund claim with upto-date interest, and whether the refund was to be adjusted against any liability arising on finalisation of the pending assessment.

Analysis: The writ petition concerned inaction on a refund representation relating to excess KVAT paid. The pending assessment for the relevant year was relevant because any amount found due from the petitioner on finalisation of that assessment had to be set off against the refundable amount. The Court directed consideration of the representation within a fixed time and required computation of the refund together with upto-date interest under Section 89 of the Kerala Value Added Tax Act, so that only the balance, after lawful deduction of dues under the pending assessment, would be released.

Conclusion: The petitioner succeeded to the extent of obtaining a direction for timely consideration of the refund claim and computation of refund with interest, subject to adjustment of dues, with the balance refundable thereafter.

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