Court orders respondent to pay costs, deems withholding refund illegal, and directs refund with interest.

The court allowed the writ petition, directing the 5th respondent to pay costs of Rs. 25,000 to the petitioner. The impugned order withholding the refund was deemed arbitrary, illegal, and without jurisdiction. The respondents were ordered to refund Rs. 28,10,432 with 12% interest p.a. from 2.8.1993 to 22.1.2004 and from 5.11.2009 until payment.

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Issues Involved:
1. Assessment and revision of sales tax on packing material.
2. Refund of excess tax paid.
3. Delay in refund and interest on delayed refund.
4. Compliance with court orders and contempt proceedings.
5. Legality of withholding the refund.

Issue-wise Detailed Analysis:

1. Assessment and Revision of Sales Tax on Packing Material:
The petitioner, M/s ACC Limited, was assessed to sales tax for the years 1979-80 and 1980-81 on the turnover related to packing material under the APGST Act, 1957. The original adjudicatory authority levied tax at basic rates of 3% and 8% on packing material and cement respectively. These orders were revised by the Deputy Commissioner, who raised additional demands due to an alleged incorrect tax rate applied to packing material.

2. Refund of Excess Tax Paid:
The petitioner challenged the additional demand before the Supreme Court, which remanded the matter. The 2nd respondent confirmed the levy at 8%, resulting in an additional tax of Rs. 28,10,432/-. The petitioner appealed to the Sales Tax Appellate Tribunal, which allowed the appeals, but the refund of Rs. 28,10,432/- was not processed. The petitioner sought a refund of this amount.

3. Delay in Refund and Interest on Delayed Refund:
Despite the Tribunal's order, the refund was withheld. The petitioner sought interest on the delayed refund as per Sec.33-F of the Act. The court noted that the respondents admitted the payment by Demand Drafts, which under Sec. 64(1) of the Negotiable Instruments Act, 1881, is equivalent to payment. The court emphasized that the presentation and encashment of the Demand Drafts were the respondents' responsibility.

4. Compliance with Court Orders and Contempt Proceedings:
The court observed that there was a failure to comply with its order to file a report on the reasons for withholding the refund. The Commissioner did not file the report within the stipulated time, leading to show cause notice for contempt. The Commissioner later filed an affidavit explaining the administrative difficulties in verifying the payment details due to disbandment of the Company Circle and the inability to trace challans.

5. Legality of Withholding the Refund:
The court held that withholding the refund on the grounds of missing challan details was not valid. The respondents' action was found to be violative of Articles 14, 19, 265, and 300-A of the Constitution of India. The court referenced several precedents establishing that the delivery of Demand Drafts constitutes payment, and any delay in encashment does not affect the payer's obligation. The court also noted that withholding the refund without specifying a period and beyond six months was an abuse of power.

Judgment:
The writ petition was allowed with costs of Rs. 25,000/- to be paid by the 5th respondent to the petitioner. The court declared the impugned order withholding the refund as arbitrary, illegal, and without jurisdiction. The respondents were directed to refund Rs. 28,10,432/- with interest at 12% p.a. from 2.8.1993 to 22.1.2004 and from 5.11.2009 till the date of payment.

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