M/S Sukhdev & Co vs. State Of Punjab And Ors

Held

The Court held that the petitioner is entitled to the interest due on the refund of tax as per the provisions of the Punjab Value Added Tax Act, 2005. The Financial Commissioner, Taxation, Punjab, had assured the Court that interest payable to assessees would be paid and that instructions had been issued to expedite the disposal of refund applications. In the specific case of M/s Sukhdev & Company, the tax amount had already been refunded, but the interest component remained outstanding. The Court accepted the assurance of the Financial Commissioner regarding the streamlining of refund processes and the payment of interest. The ratio decidendi is that statutory entitlements to interest on delayed tax refunds must be honored, and the administration should ensure efficient processing of such claims, especially when assured to the Court. The Court directed that the amount of interest due to the petitioner be paid within four weeks. The writ petition was disposed of with this direction.

Facts

The petitioner, M/s Sukhdev & Company, filed a writ petition seeking a direction for the release of refund of tax due to them. The High Court of Punjab and Haryana had previously directed the Financial Commissioner, Taxation, Punjab to appear in person to address the issue of avoidable litigation concerning refunds. The Financial Commissioner appeared and submitted that post-GST implementation, refund processes are being streamlined. He stated that approximately ₹750 crores are due for refund under the Punjab Value Added Tax Act, 2005, and the process is expected to be cleared within four months. Interest payable on delayed refunds would also be paid. Instructions were issued to Assistant Excise & Taxation Commissioners to prioritize disposal of pending refund applications, with disciplinary action for non-compliance. In the present case, the tax amount had been refunded, but the interest payable under the VAT Act was still due.

Key Issues

1. Whether the petitioner is entitled to receive the interest due on the refund of tax under the Punjab Value Added Tax Act, 2005, as per its provisions? (Question of law) Petitioner's contention: The petitioner, through its counsel, argued that the tax amount had been refunded, but the interest payable as per the provisions of the VAT Act was still due and should be released. Respondents' contention: The Financial Commissioner, Taxation, Punjab, submitted that the process for refund of excess amounts paid by assessees is being streamlined after the introduction of GST. He assured that interest payable to assessees in terms of the VAT Act would also be paid. He further stated that instructions have been issued to monitor the disposal of refund applications and that assessments in cases where refunds are claimed will be prioritized. The respondents did not dispute the petitioner's entitlement to interest but indicated a general process for clearing such dues.