M/S Sharp Business Systems (INDIA) PVT. LTD. Lko. Thru. Its Authorized Signatory Shri Arjun Kumar vs. State Of U.P. Thru. Secy. Institutional Finance U.P. Govt. Lko. And Another

Facts

The petitioner, M/s Sharp Business Systems (India) Pvt. Ltd., sought a writ of mandamus directing the respondent, the Assessing Authority, to grant refunds of Rs. 14,17,051/- and Rs. 32,44,922/- for the assessment years 2000-01 and 2001-02, respectively. The Assessing Authority had ordered these refunds on April 16, 2019. The petitioner also sought interest on the delayed refund. The petitioner stated that no tax was due from them under the U.P. Trade Tax Act, VAT Act, or GST Act. While some payments were made subsequently, the ordered refunds and interest were not provided. After the writ petition was filed, the principal refund amounts were paid. The dispute then narrowed to the claim for interest on the delayed refund.

Held

The Court held that the petitioner was entitled to interest on the delayed refund. The Assessing Authority had passed an order on April 16, 2019, directing the refund of Rs. 14,17,051/- and Rs. 32,44,922/-. Although the principal amounts were subsequently paid after the filing of the writ petition, the interest component remained unpaid. The Court acknowledged that the petitioner had prayed for interest from July 16, 2019, until the date of actual payment. The reasoning was based on the statutory entitlement to interest for delayed refunds, as indicated by the reference to Section 40(2) of the U.P. V.A.T. Act. The Court directed the respondents to pay the interest as per the relevant Act and Rules within three months from the date of production of the order. The issue of the principal refund amount was rendered infructuous as it had been paid.

Key Issues

1. Whether the petitioner is entitled to interest on the delayed refund of Rs. 14,17,051/- and Rs. 32,44,922/- for the assessment years 2000-01 and 2001-02, as per the relevant provisions of law. Petitioner's Contention: The petitioner argued that they are entitled to interest on the delayed refund, as mandated by Section 40(2) of the U.P. V.A.T. Act. They contended that the Assessing Authority's order dated April 16, 2019, directed the refund, and the subsequent delay in payment entitled them to simple interest at 12% from the date of the order until the actual payment was made. Respondent's Contention: The State respondents did not record any specific arguments against the petitioner's claim for interest in the judgment. However, they were directed to pay the interest as per the relevant Act and Rules.