Court orders interest on tax refund due to State's error, directs prompt calculation, pending Supreme Court decision.

The High Court held that the Dealer was entitled to interest on the refund due to the State's error in levying a higher tax rate. The Court emphasized the State's significant delay in filing appeals against the Tribunal's order for refund with interest and directed the State to calculate the interest amount promptly. The Court adjourned the matter to await the Supreme Court's decision on the State's Special Leave Petition challenging the High Court's order, indicating that if no interim relief was granted, the State must disburse the amount or deposit it with the Court Registry.

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Issues:
Entitlement of claim of interest on refund under section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.

Analysis:
The High Court noted that the State had filed Tax Appeals against the Tribunal's order for refund with interest back in 2015, which were dismissed by the Court in June 2018. The Court observed that the State's delay in filing the appeals was significant, especially considering that the Tribunal had already issued directions for refund with interest years prior. The Court highlighted the State's argument that the case was factually distinguishable from previous decisions where interest on refund was allowed under the Sales Tax Act. However, the Court disagreed, emphasizing that the Dealer was entitled to interest on the refund due to the State's error in levying a higher tax rate. The Court clarified that the issue of interest on refund under the Sales Tax Act was settled by their previous judgment in June 2018.

In light of the State filing a Special Leave Petition (SLP) before the Supreme Court challenging the High Court's order, the Court acknowledged the pending SLP and the State's efforts to obtain a stay on the operation of the High Court's order. The Court expressed concern over the delay caused by the State's actions and indicated that if the Supreme Court did not pass an interim order, the State would be directed to either disburse the amount or deposit it with the Court Registry. The Court adjourned the matter multiple times to allow for developments in the Supreme Court regarding the SLP.

The Court directed the Deputy Commissioner of Commercial Tax to calculate the interest amount to be paid by the State, emphasizing that the calculation must be presented without fail at the next hearing. The Court reiterated its stance that if no interim order was issued by the Supreme Court by the next hearing, the State would be required to either disburse the amount or deposit it with the Court Registry. The Court emphasized the importance of resolving the matter promptly, especially considering the prolonged delay and the clear entitlement of the Dealer to interest on the refund amount.

Overall, the judgment focused on the State's delay in challenging the Tribunal's order for refund with interest, the Dealer's entitlement to interest on the refund amount, and the procedural steps to be taken if the Supreme Court did not provide any interim relief. The Court underscored the need for timely resolution and adherence to legal obligations regarding the refund under the Sales Tax Act.

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