TaxTMI 
TaxTMI 
2005 (5) TMI 609
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....xed for collecting the revenue in a fiscal year is achieved and they are not asked to give explanation for the short fall, can be seen in the present case. While the Trade Tax authorities are at liberty to take recourse to legal means available under the U.P. Trade Tax Act (hereinafter referred to as "the Act") and the U.P. Trade Tax Rules (hereinafter referred to as "the Rules") as also other allied laws on the subject but they cannot be permitted to use extra-constitutional method in depriving an assessee of his rightful dues. While they are prompt in collecting the tax revenue, the promptness disappears and takes a back seat when the question arises on granting refund and that too alongwith interest as provided under Section 29 of the Act. This Court has been flooded with the petitions filed under Article 226 of the Constitution of India seeking for a writ of mandamus directing the Trade Tax authorities to grant refund as also interest. The present petition is one such example. Time and again, this Court had expressed its concern over the indifferent attitude adopted by the Trade Tax authorities in not making the refund and refusing to pay the statutory interest but appears to h....
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....are as follows:- According to the petitioners, they are registered dealers under the Act as well as the Central Sales Tax Act. Both the petitioners are engaged in manufacture of coal briquettes and also deal in coal. The Deputy Commissioner, Trade Tax, III, Allahabad, respondent no.3, is the Assessing Authority of the petitioner no.1 whereas the Deputy Commissioner (Assessment), Trade Tax, Allahabad, respondent no.4, is the Assessing Authority of the petitioner no.2. So far as the petitioner no.1 is concerned, an assessment order under Rule 41(8) of the Rules for the assessment year 2002-2003 (U.P.) was passed by the respondent no.3 on 9.10.2003. A sum of Rs.3,17,720/- was found to have been deposited as excess by way of advance tax. It was found refundable to the petitioner no.1 and accordingly in the assessment order dated 9.10.2003, a direction was given for its refund after verification. It appears that the aforesaid assessment order was passed by best judgment assessment enhancing the taxable turnover to Rs.3.00 crores as against the disclosed taxable turnover of Rs.2,17,01,512/-. Feeling aggrieved against the enhancement of the taxable turnover, the petitioner no.1 preferr....
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.... preparation and he shall be filing it within 24 hours. The matter was fixed for 24.11.2004 on which date on the request of the learned Standing Counsel the matter was directed to be placed before the Court on 25.11.2004 when the learned Standing Counsel produced before the Court three refund vouchers out of which the two refund vouchers amounting to Rs.1,80,000/- dated 15.5.2004, and Rs.3,17,720/- dated 6.11.2004, which related to the petitioner no.1, and another refund voucher amounting to Rs.3,22,546/- dated 16.11.2004, which related to the petitioner no.2, were produced. The Court directed to hand over these refund vouchers to the learned counsel for the petitioners, which were duly received under protest by Sri C.L.Pandey, the petitioners' counsel. Thereafter, the counter affidavit was filed on 24.1.2005. In the counter affidavit, a stand has been taken that in so far as the petitioner no.1 is concerned, after the assessment order dated 9.10.2003 the refund vouchers for Rs.3,17,720/- was prepared on 6.1.2004, i.e., within three months, and the same was sent to the Joint Commissioner (Administration) Trade Tax, Allahabad for countersignature. The appellate order dated 29.1.2....
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....g Authority as also the appellate authority, was wholly arbitrary, illegal and in gross violation of the provision of Section 29(1) of the Act, which obliges the Assessing Authority to grant refund. He further submitted that if the amount is not refunded within three months from the date of the order of refund, the respondents are liable to refund the amount alongwith interest @ 18% per annum from the date of the order till the date of refund. In the present case, he submitted that as the refund had been inordinately delayed by more than a year, the petitioners are entitled for interest also in term of Section 29(2) of the Act. He has relied upon a Division Bench decision of this Court in the case of M/s Bal Govind Bhola Nath Construction Corporation, Allahabad v. Trade Tax Officer, Sector I, Allahabad and others, in Civil Misc. Writ Petition No.172 of 2000, decided on 7.10.2004. He has further relied upon a decision of the Apex Court in the case of Commissioner, Commercial and Sales Tax v. Orient Paper Mills, 2004 (35) Sales Tax Journal 481 = (2004) 9 SCC 181. The learned Standing Counsel reiterated the stand taken by the respondents in the counter affidavit, as already reprodu....
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....wards the tax liability determined upon assessment. The manner and procedure for refund have been provided by the State legislature under Section 29 of the Act. It reads as follows:- "29. Refunds - (1) The Assessing Authority shall, in the manner prescribed, refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under this Act : Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956 and only the balance, if any, shall be refunded. (2) If the amount to be refunded in accordance with sub-section (1) is not refunded as aforesaid within three months from the date of order of refund passed by the Assessing Authority or, as the case may be, from the date of receipt by him of the order of refund, if such order is passed by any other competent authority or Court, the dealer shall be entitled to simple interest on such amount at the rate of eighteen percent per annum from the date of such order or, as the case may, the date of receipt of such order of refund by the Assessing Authority to the date o....
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.... refund. Under sub-section (2) of Section 29 of the Act, it has been provided that if the amount found to be refundable is not refunded within three months from the date of the order of refund passed by the Assessing Authority or, as the case may be, from the date of receipt by him of the order of refund, if such order is passed by any other competent authority or Court, the dealer has been made entitled to simple interest @ 18% per annum from the date of such order or, as the case may be, the date of receipt of such order of refund passed by the Assessing Authority to the date of refund. Explanation I provides that the date of refund shall be deemed to be the date on which intimation regarding preparation of the refund voucher is sent to the dealer. Thus, according to Section 29 of the Act, if the amount which has been found refundable, is not refunded within three months from the date of the order of refund or the receipt of the order, in case the order of refund is passed by a higher authority or the Court, then interest @ 18% per annum is payable from the date of the order or the receipt of the order. In the case of M/s Trade Link India, Ghaziabad v. Trade Tax Officer, Ghazia....
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....tition No.24 of 2000, decided on 8.10.2004, has directed the payment of interest where the refund had not been given within 90 days from the date of the order. While following its earlier decision in the case of M/s Trade Link India (supra), this Court has held as follows:- "Respectfully following the aforesaid decision we are of the considered opinion that the respondent ought to have refunded the amount within a period of 90 days from the date of the order for refund and if the refund for any reason whatsoever has not been made within the aforesaid period, they are liable to pay interest as provided under Section 29(2) of the Act. In this view of the matter as the refund has been given after 90 days from the order of refund i.e. 27th March, 1999 the petitioner is entitled for the interest from 27th March, 1999 till the date of actual refund. We are not impressed by the submission made by the learned counsel for the petitioner that the petitioner is entitled for the interest from the date of deposit as the amount of refund and interest is governed by Section 29(2) of the Act, which does not permit the refund unless there is specific order of refund." This Court in the case ....
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....ot granting refund when it became due and also non-payment of interest in the following words:- "9. It is seen that the Trade Tax authorities are acting arbitrarily and unfairly in refunding the amount. They are expected to show promptness in realizing tax due and at the same time, they should be prompt and fair in refunding the excess amount. Normally, they try to defer the refund on one pretext or the other. It is also seen that the Trade Tax authorities acts unfairly in not paying the interest due under Section 29(2) and tried to deny for one reason or the other. Payment of interest is contemplated in the statute under Section 29(2), therefore, it is incumbent upon the authority to pay interest alongwith the amount refundable and as a part of the statutory responsibility. Non-payment of interest due under Section 29(2) amounts to flouting the law and not discharging its statutory obligations. Senior Officers may see that the Assessing Authority may also pay interest due alongwith the refund voucher and in case, if they fails to pay, necessary action may be taken against them." We are in respectful agreement with the aforesaid view and share the concern expressed by the lea....
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....on one pretext or the other. Thus, the explanation regarding delay in making the refund is devoid of any substance. The Apex Court in the case of Commissioner of Income Tax, West Bengal I v. Simon Carves Ltd., (1976) 105 ITR 212, has held that the taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from an assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighed against the assessee. We are wholly unable to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed not to have exercised it in a proper and judicious manner. Applying the principles laid down in the aforesaid cases to the facts of the present case, we are of the considered opinion that so far as the petitioner no.1 is concerned, it is the admitted case that in the assessment order dated 9.10.2003, the respondent no.3 had passed an order of refund for Rs.3,17,720/-. The petit....
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....f interest on the aforesaid amount of Rs.1,10,432/-. Sri C.L.Pandey, learned counsel, also raised a plea regarding the liability for payment of interest on the amount of interest, which has been illegally withheld by the respondents as the amount of interest has not been paid while making the refund of the amount intimated on 17.11.2004 and paid over on 25.11.2004. We have given our serious consideration to the aforesaid plea and we are of the opinion that even though under the Act and the Rules framed thereunder, there is no provision for payment of interest on the amount of interest illegally withheld but in exercise of our equitable jurisdiction under Article 226 of the Constitution of India, we deem it proper to direct the respondents to pay interest at the current bank rate, i.e., 10% per annum, on the amount of interest so calculated from 25.11.2004 till the date of actual payment inasmuch as the petitioners have been illegally and arbitrarily deprived of their lawful claim for the refund of the amount which they have paid in excess over what was actually due and payable under the Act and further the respondents have also illegally, arbitrarily and without authority of ....