M/S Micro Inks Limited vs. State Of Gujarat

Held

The Court held that the petitioner's submissions were without substance. It was not disputed that the petitioner had not raised any objection regarding the non-grant of interest under Section 38(2) after the appeals were disposed of. The Court noted that the orders passed in appeals for the relevant years were taken into revision by the Additional Commissioner (Investigation) under Section 75 of the said Act. This revision imposed an additional liability on the petitioner for tax and interest. The petitioner paid the tax and was granted remission for the interest amount. The Court reasoned that since the appellate order was revised, the question of invoking Section 38(2) did not arise. Section 38(2) grants interest on refund amounts in pursuance of orders other than those referred to in sub-section (1) or by a Court. In this case, the revision orders meant the petitioner was liable to pay, not entitled to a refund. As there was no order for refund by the revisional authority or any other court, the invocation of Section 38(2) was considered misplaced. Consequently, all petitions were dismissed.

Facts

The petitioner, M/s. Micro Inks Limited, filed multiple petitions challenging the rejection of their rectification applications. The core issue stemmed from an assessment order for FY 2006-07, which initially ordered a refund of Rs. 52,34,506/- plus interest. An appeal led to a revised refund order of Rs. 93,59,863/- paid on 27.12.2017. Subsequently, a revision under Section 75 of the Gujarat Value Added Tax Act, 2003, directed the petitioner to pay Rs. 1,20,709/- tax and Rs. 2,69,785/- interest. The petitioner paid the tax and was granted remission for the interest. The petitioner then sought rectification under Section 79 to claim interest under Section 38(2) on the refund amount, arguing the appellate order failed to award it. The rectification application was rejected as time-barred, and the revision order was dated 21.07.2020, covering periods 2006-07, 2007-08, and 2008-09.

Key Issues

1. Whether the petitioner is entitled to statutory interest under Section 38(2) of the Gujarat Value Added Tax Act, 2003, on the refund amount ordered by the appellate authority, even if not explicitly awarded in the appellate order, and whether the rectification application filed for this purpose was valid. Petitioner's contention: The petitioner argued that the appellate authority (Respondent No. 2) was obligated under Section 38(2) of the said Act to award statutory interest on the additional refund amount, even if not specifically demanded. They contended that their subsequent rectification application was necessary to correct this omission and that its rejection was based on extraneous considerations. Revenue's contention: The Revenue contended that the petitioner had not raised any objection regarding the non-grant of interest after the appeals were disposed of. Furthermore, the subsequent revision order under Section 75 of the said Act superseded the appellate order, and by virtue of the revision, the petitioner was liable to pay additional tax and interest, not entitled to any refund. Therefore, invoking Section 38(2) was misplaced.