Audit circulars cannot override revisional orders; refundable pre-deposits must be returned with statutory interest when delay is unjustified.

A circular governing VAT audit procedure cannot be used to invalidate revisional orders passed under the Assam Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956, especially where the revisional orders were based on enquiry material and no fraud, collusion or perversity was shown. The document also states that a pre-deposit made in revision is not tax payment; once revision is allowed, the amount becomes refundable after lawful adjustment, if any. Where the refund is withheld despite directions for fresh assessment, statutory interest is payable on the delayed refund, and a show cause notice inconsistent with the revisional outcome cannot survive.

---

---

Issues: (i) Whether Circular No. 15/2010 could be relied upon to invalidate the revisional orders passed under the Assam Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956; (ii) Whether the assessee was entitled to refund of the pre-deposit amount together with interest and consequential quashing of the show cause notice.

Issue (i): Whether Circular No. 15/2010 could be relied upon to invalidate the revisional orders passed under the Assam Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956.

Analysis: The Circular was issued in the context of VAT audit of inter-State sales by bonded warehouses and required verification of actual movement of goods before audit completion. It governed the audit function under the assessment framework and did not lay down any instruction controlling the revisional power. The revisional orders also recorded enquiries based on excise documents, certificates from receiving States and other material, and there was no showing of fraud, collusion or perversity. In the absence of any stay of the revisional orders, no basis existed to interfere with them on the strength of the Circular.

Conclusion: The challenge to the revisional orders failed and the orders were upheld.

Issue (ii): Whether the assessee was entitled to refund of the pre-deposit amount together with interest and consequential quashing of the show cause notice.

Analysis: The amount deposited at the stage of revision was a pre-deposit and not payment of tax. Once the revision petitions were allowed, the assessee became entitled to refund of the excess amount after lawful adjustment, if any. The revisional authority had directed fresh assessments within 30 days, but the direction was not complied with and the amount continued to be withheld without justification. That delay warranted interest at the statutory rate under the Act. The show cause notice seeking to deny refund was inconsistent with the effect of the revisional orders and could not stand.

Conclusion: The assessee was held entitled to refund with interest at 9% per annum from 08.05.2021, and the show cause notice was quashed.

Final Conclusion: The departmental challenge to the revisional orders was rejected, while the assessee obtained consequential refund relief, interest and quashing of the impugned notice, subject to completion of fresh assessment orders in accordance with the revisional directions.

Ratio Decidendi: A circular governing audit procedure cannot be used to displace or invalidate a revisional order passed on merits, and where such revisional order remains unstayed, the authority must give effect to it and cannot indefinitely retain a pre-deposit that has become refundable; delayed refund carries statutory interest.

---