2025 (12) TMI 1734 - HC - VAT / Sales Tax

Sales tax refund after rectified assessment: when six-month clock starts under s. 33-E, interest denied as paid promptly.

Entitlement to interest on delayed refund under ss. 33, 33-A and 33-E of the Andhra Pradesh General Sales Tax Act, 1957 turned on when the statutory ... Delayed refund of tax - Entitlement to interest on the refunded excess tax u/s 33, 33-A and 33-E of the Andhra Pradesh General Sales Tax Act, 1957 - HELD THAT:- The right of the petitioner to claim refund of tax and interest on such refund, if there is a delay in refunding the tax, can be traced to Sections 33, 33-A & 33-E of the Andhra Pradesh General Sales Tax Act, 1957. Section 33-A of the Act, states that the dealer is also entitled to move an application for refund of tax. This application can be moved on or after the date, on which the tax in respect of which the claim is being made, is directed to be refunded. Section 33-E of the Act, stipulates that, any application made for refund of tax should be cleared and the refund should be paid out within six months, from the date on which the claim for refund is made. In the event of any delay beyond the six month period, the dealer would be entitled to interest @ 12% for the period between the expiry of six months, after the filing of the claim till the refund is given. In the present cases, the petitioner became entitled to a refund only after the Commercial Tax Officer, had passed an Order, dated 06.09.2018, on the application made by the petitioner under Rule 50. Thereafter, the refund amount is said to have been paid in October, 2018 itself. If it is to be held that the Order passed under Rule 50 itself gave rise to a refund, the Assessing Authority, at the earliest, had a period of six months for making the said payment. Since the refund was made in October, 2018 within a month of the Order, dated 06.09.2018, there is no delay, which would attract interest @ 12% p.a., as stipulated under Section 33-E of the A.P.G.S.T. Act, 1957. The petitioner would contend that, the application for refund was actually made, after the Orders of the Hon’ble Supreme Court had been passed and as such, there is a delay in refund, which would entitle the petitioner for interest. This Court is unable to accept this contention, in the face of the language of Sections 33 & 33-E of the Act. The starting point for making any payment, on the ground of refund, would arise only after an Order of Assessment, gives rise to a refund. In the present cases, such a situation would arise, only upon the passing of the Order of Rectification, under Rule 50, on 06.09.2018. Since the refund had been made in October, 2018 itself, there is no delay, which would attract interest u/s 33-E of the A.P.G.S.T. Act, 1957. There are no merit in the present set of Writ Petitions - petition dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1) Whether the petitioner was entitled to statutory interest on the refunded excess tax under Sections 33, 33-A and 33-E of the Andhra Pradesh General Sales Tax Act, 1957, when the excess was determined and refund was made after deletion of turnover relating to free supply of goods. 2) What is the legally relevant 'starting point' for computing delayed-refund interest under Section 33-E: the earlier refund-related applications filed by the petitioner, or the later order that first directed/created entitlement to refund by deleting turnover and determining excess payment. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2 (Grouped): Entitlement to interest on refund and commencement point under Sections 33, 33-A and 33-E Legal framework (as discussed by the Court): The Court traced the right to refund and interest to Sections 33, 33-A and 33-E. Section 33 obligates refund/adjustment of tax found in excess for a period. Section 33-A contemplates a claim for refund being made 'on or after' the date on which the tax is directed to be refunded. Section 33-E provides interest at 12% per annum only if the refund is not granted within six months from the date the claim for refund is made under Section 33-A, subject to exclusion of delay attributable to the assessee. Interpretation and reasoning: The Court held that the operative trigger for refund (and therefore for any question of delay) is when an order in the assessment/rectification process gives rise to a refund, i.e., when excess tax is determined and refund is directed. The Court accepted that, in these cases, entitlement to refund arose only upon the rectification order under Rule 50 dated 06.09.2018, which deleted turnover relating to free supply of goods and consequently determined excess tax paid. The Court rejected the petitioner's contention that interest should run from the earlier dates of applications (including the 2006 or 2014 applications), holding that the statutory language confines the commencement to the stage when a refund is directed/created by a competent order, not merely when a request is made. Conclusions: Since the refund was made in October 2018, i.e., within about a month of the 06.09.2018 order (and in any event within the six-month period referenced in Section 33-E), there was no 'delay' attracting statutory interest. Consequently, the petitioner was not entitled to interest on the refunded amount, and the writ petitions were dismissed for lack of merit.