M/S Saurav Udyog vs. State Of Punjab And Ors

Held

The Court directed that the amount of interest due to the petitioner be paid within four weeks. This decision was based on the assurance given by the Financial Commissioner, Taxation, Punjab, that wherever interest is payable to the assessees in terms of the provisions of the VAT Act, the same shall also be paid. The Court implicitly accepted the petitioner's claim for interest by ordering its payment. The underlying principle is that assessees are entitled to statutory interest on delayed refunds as provided under the relevant tax legislation. The Court's intervention aimed to expedite the process and ensure compliance with the statutory provisions concerning interest on refunds. No specific issue was left undecided.

Facts

The petitioner, M/s Saurav Udyog, filed a writ petition seeking a direction for the release of refund of tax due to them. The Financial Commissioner, Taxation, Punjab, appeared in person following a court order. He submitted 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 refunds would be cleared within four months and any applicable interest would also be paid. Instructions were issued to Assistant Excise & Taxation Commissioners to prioritize disposal of pending refund applications. 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 interest on the delayed refund of tax paid under the Punjab Value Added Tax Act, 2005? Petitioner's Argument: The petitioner argued that they are entitled to interest on the delayed refund as per the provisions of the VAT Act. The judgment does not explicitly record the petitioner's specific arguments beyond this entitlement. Respondents' Argument: The respondents, represented by the Financial Commissioner, Taxation, Punjab, acknowledged the delay in refunds and the pendency of a significant amount to be refunded. They submitted that the process is being streamlined and assured that interest, where payable, would also be paid. The judgment does not record specific legal arguments from the respondents regarding the entitlement to interest.