M/S Gb Tools And Forgings LTD vs. State Of Punjab And Others

Held

The Court held that the petitioner is entitled to the interest payable on the delayed refund of tax under the provisions of the Punjab Value Added Tax Act, 2005. The Financial Commissioner, Taxation, Punjab, had assured the Court that the process for refunds under the VAT Act was being streamlined and that all pending refunds, including interest, would be cleared. In the specific case of the petitioner, the tax amount had already been refunded, but the interest component was still due. 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 GB Tools and Forgings Ltd., 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 pending refunds. The Financial Commissioner stated that the refund process under the Punjab Value Added Tax Act, 2005 (VAT Act) is being streamlined, with approximately ₹750 crores to be refunded to assessees. He assured that pending refund applications would be disposed of within four months, and any applicable interest would also be paid. In the present case, while the tax amount had been refunded, the interest payable under the VAT Act was still due to the petitioner.

Key Issues

1. Whether the petitioner is entitled to receive interest on the delayed refund of tax paid under the Punjab Value Added Tax Act, 2005? Petitioner's contention: The petitioner argued that they are entitled to interest on the refund as per the provisions of the VAT Act, as the tax amount had been refunded but the interest component remained outstanding. Revenue's contention: The Financial Commissioner, Taxation, Punjab, submitted that the process for refund of excess amounts paid by assessees has been streamlined following the introduction of GST. He stated that approximately ₹750 crores is to be refunded under the VAT Act and the process is expected to be cleared within four months. He assured that interest payable to assessees in terms of the VAT Act would also be paid. He further assured that assessment cases where assessees have claimed refunds would be prioritized.