2026 (2) TMI 427 - HC - VAT / Sales Tax

Entitlement to interest on delayed VAT refund of excess tax; interest ordered after reassessment and delayed payment.

Entitlement to interest on delayed VAT refund was affirmed under the statutory refund regime: after reassessment reduced assessed liability, authorities ... Entitlement to interest on delayed refund u/s 39(5) of the Chhattisgarh Value Added Tax Act, 2005 - duty of tax authorities to refund excess amount after reassessment - obligation to act upon a bona fide representation for refund - HELD THAT:- Admittedly, there was some dispute with regard to assessment done by the Assessment Authority, therefore, an application was moved for reassessment and subsequently, the amount arrived at by the assessment authority was reduced to the figure of Rs. 68,799/- (VAT) and Rs.70,464/- (Entry Tax). The order of reassessment was passed on 18.6.2024 and thereafter, the authorities concerned should have refunded the amount into the bank account of the petitioner. The submission made by counsel for the State appears to be proper that no representation was made by the petitioner, therefore, no steps were taken but the documents would show that the representation was made by the petitioner before the authority concerned on 15.3.2025 and reminder was sent on 28.3.2025, therefore, the authorities concerned should have taken a prompt decision after receipt of the representations. The step was taken by the respondent authorities with regard to refund of excess amount after filing of writ petition. The respondent authorities exercised power under Section 39(5) of Act, 2005 and Rule 47 of the Rule 47 of the Chhattisgarh Value Added Tax Rules, 2006 (for short Rules, 2006) suo moto and refunded the amount into the bank account of the petitioner. According to the provisions of Section 39(5) of the Act, 2005, the petitioner is entitled to be paid interest @0.5% per month if the excess amount is not paid to the assessee within the stipulated time. Thus, the petitioner shall be entitled for interest @0.5% per month on the amount of Rs. 60,62,081/- from 20.3.2025 till the actual date of payment i.e. 31.10.2025. With the aforesaid direction(s), this petition is disposed of. Issues: (i) Whether the petitioner is entitled to statutory interest at the rate of 0.5% per month on the refunded amount of Rs. 60,62,081/- for the period from 20.03.2025 to 31.10.2025 in view of the reassessment and delayed payment of refund.Analysis: The matter involves reassessment which reduced the tax liability to Rs. 1,39,263/-, resulting in an excess recovery of Rs. 60,62,081/- that was refunded by the respondents on 31.10.2025. The petitioner submitted a representation dated 15.03.2025, received on 20.03.2025, and a reminder dated 28.03.2025. The statutory scheme provides for payment of interest where excess amount is not refunded within the stipulated time. Section 39(5) of the Chhattisgarh Value Added Tax Act, 2005 and Rule 47 of the Chhattisgarh Value Added Tax Rules, 2006 permit payment of interest on delayed refunds. Although Section 56 was referenced as an available remedy, the operative entitlement to interest arises from Section 39(5) read with Rule 47; the refund was effected only after filing the writ petition and after the representations were on record, thereby causing a period of delay between receipt of representation (20.03.2025) and actual payment (31.10.2025).Conclusion: The petitioner is entitled to interest at the rate of 0.5% per month on Rs. 60,62,081/- for the period from 20.03.2025 till 31.10.2025; the interest shall be paid by the respondent authorities within 30 days from receipt of the order.