Statutory predeposit refund interest applies when an appellate deposit is returned after success, with the ninety-day period running from receipt of the appellate order.

A statutory predeposit made at the appellate stage under the Gujarat Sales Tax Act retained its character as an amount refundable when the appeal succeeded and the tax demand was reduced or set aside. On a combined reading of Sections 54 and 65, the refund attracted interest under Section 54(1)(aa) because the deposit was part of the statutory appellate scheme and did not lose that status merely because it was made as a condition for appeal. The ninety-day period for interest was to run from receipt of the appellate order by the Sales Tax Officer, after which interest at 9% per annum became payable.

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Issues: Whether the assessee was entitled to interest at 9% per annum on the refund of the amount deposited as predeposit while preferring the appeal, under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.

Analysis: The amount deposited at the stage of appeal was treated as a statutory predeposit under Section 65(4) of the Gujarat Sales Tax Act, 1969. On a conjoint reading of Sections 54 and 65, once the appeal succeeds and the tax demand is reduced or set aside, the excess amount paid at the appellate stage becomes refundable. The Court held that such refund does not lose its character merely because it was initially deposited as a precondition for maintaining the appeal. Interest under Section 54(1)(aa) therefore follows, though the statutory period of ninety days is to be computed from the receipt of the appellate order by the Sales Tax Officer.

Conclusion: The assessee was held entitled to interest at 9% per annum on the refunded predeposit amount, calculated after expiry of ninety days from the date of receipt of the appellate order by the Sales Tax Officer.

Ratio Decidendi: A predeposit made under the appeal provision, when refunded pursuant to success in appeal, is covered by the statutory scheme for refund interest under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969, and carries interest from the expiry of the prescribed ninety-day period.

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