VAT refund rights prevail where assessment is not completed and withholding lacks statutory basis.

The Gujarat Value Added Tax framework was applied to hold that tax collected from purchasers could not be retained indefinitely when no assessment order had been passed within the prescribed period. In the absence of completed assessment and without any legally sustainable invocation of the withholding provisions, the authorities had no justification to continue withholding the amount. The court relied on the refund scheme under Section 36, the limitation provisions in Section 34(9) and Section 34(10), and the limited withholding power under Section 39, and concluded that the retention was contrary to the statutory scheme. The dealer was entitled to refund with statutory interest.

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Issues: Whether the tax amount collected from the dealer could be withheld without completing assessment and whether the dealer was entitled to refund with statutory interest under the Gujarat Value Added Tax Act, 2003.

Analysis: The writ applicant had deposited tax collected from purchasers, but no assessment order was passed within the prescribed period. The Court held that in the absence of a completed assessment and in the absence of any legally sustainable action under the withholding provisions, the authorities had no justification to retain the amount. The Court relied on the scheme of refund under Section 36 of the Gujarat Value Added Tax Act, 2003, the limitation provisions under Section 34(9) and Section 34(10), and the limited power to withhold refund under Section 39. The withholding of the amount was found contrary to the statutory scheme.

Conclusion: The writ applicant was entitled to refund of the withheld amount together with statutory interest, and the refund could not be denied on the facts of the case.

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