Court quashes interest on delayed refund, directs reassessment. Commissioner to issue new order.

The court quashed the order granting interest on the delayed refund, directing reassessment without applying the third proviso to Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969. The Commissioner was instructed to consider the petitioner's interest calculation and issue a new order within four weeks, ensuring the petitioner's participation in the process. The court ruled in favor of the petitioner, emphasizing the inapplicability of the third proviso to Section 54(1)(aa) in this case.

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Issues Involved:
1. Non-granting of interest on refund for the period 1994-95.
2. Legality of the assessment order dated 10.10.2017.
3. Calculation of interest on the delayed refund under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.
4. Applicability of the third proviso to Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969.

Detailed Analysis:

Issue 1: Non-granting of Interest on Refund for the Period 1994-95
The petitioner, a public limited company, challenged the assessment order dated 10.10.2017, which declined to grant interest on the delayed refund for the assessment period 1994-95 under Section 54(1)(aa) of the Gujarat Sales Tax Act, 1969. The petitioner also contested the order dated 03.08.2019, which granted interest on the refund amount from the date of tax deposit till the date of the assessment order, excluding the period during which appeals were pending.

Issue 2: Legality of the Assessment Order Dated 10.10.2017
The assessment order dated 10.10.2017 by the Deputy Commissioner of Commercial Tax determined the total tax and granted a refund but declined to grant any interest. The petitioner argued that the order did not comply with the Tribunal's directive to grant interest on the refund amount.

Issue 3: Calculation of Interest on the Delayed Refund Under Section 54(1)(aa)
The petitioner contended that the interest should be calculated from the date of closure of the accounting year to the date of the assessment order. The respondents, however, calculated interest only for the period of 842 days, excluding the period during which appeals were pending. The petitioner provided a calculation chart showing a significant variance in the interest amount due, claiming an entitlement to Rs. 4,40,00,000, whereas the respondents calculated Rs. 70,83,338.

Issue 4: Applicability of the Third Proviso to Section 54(1)(aa)
The core issue was whether the third proviso to Section 54(1)(aa) applied to the case, which excludes the period during which appeals or revisions are pending from the calculation of interest. The court held that the third proviso is applicable to Section 54(1)(a) and (b) and not to Section 54(1)(aa). The court emphasized that the proviso should be interpreted in relation to the principal matter it qualifies, and in this case, it does not apply to Section 54(1)(aa).

Conclusion:
The court quashed the order dated 03.08.2019, directing the Commissioner to reassess the interest calculation without invoking the third proviso to Section 54(1)(aa). The Commissioner was instructed to consider the petitioner's calculation chart and pass a fresh order within four weeks, ensuring that the petitioner is heard before the final determination. The court made the rule absolute to this extent in each writ application and permitted direct service.

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