United Spirits LTD. (Erstwhile Mcdowell And Co. LTD.), Rep. By Its Officer, Suraj Shenvi Pilgaonkar vs. State Of Goa, Through The Chief Secretary And 4 Ors.

Held

The Court held that the Respondents are liable to pay simple interest at 8% per annum on the refunded amount of Rs.52,36,030.69 towards interstate/local sales for the period from June 29, 2011 (90 days after the assessment order dated March 29, 2011) until February 20, 2016 (date of actual refund). The Court reasoned that the statutory period for interest accrual begins after 90 days from the assessment order, and the sanction under Rule 30, though necessary for actual disbursement, does not negate the interest liability that accrued earlier. Similarly, the Court held that the Respondents must pay simple interest at 8% per annum on the amount of Rs.28,83,213.31 towards input tax credit/export sales, calculated proportionately from April 24, 2009, and July 18, 2008 (90 days after the respective refund application dates under Section 10(3)), until February 20, 2016. The Court's reasoning was that the principle of statutory interest entitlement applies even if the refund is sanctioned later. The Court expressly left undecided the issue of Rs.8,51,594.88 towards VAT Input Tax Credit on export sales, directing adjudication by the appropriate authorities within four months. The operative directions included payment of the calculated interest within eight weeks.

Facts

The Petitioner, United Spirits Ltd., filed returns under the Goa Value Added Tax Act, 2005 for the year 2007-2008. An Assessment Order dated March 29, 2011, determined an amount of Rs.1,92,91,143/- as refundable. Despite multiple representations and a previous writ petition (WP 940/2015) that directed a decision within three months, the Petitioner ultimately received a refund of Rs.81,19,244/- on February 20, 2016, pursuant to a sanction order dated February 1, 2016. The Petitioner did not dispute the reduced refund amount but claimed interest at 8% per annum on the refunded amount of Rs.81,19,244/-. This amount comprised Rs.52,36,030.69 towards interstate/local sales and Rs.28,83,213.31 towards input tax credit/export sales. The Petitioner also claimed Rs.8,51,594.88 towards VAT Input Tax Credit on export sales.

Key Issues

1. Whether the Respondents are liable to pay simple interest at 8% per annum on the refunded amount of Rs.52,36,030.69 (interstate/local sales) from June 29, 2011, in terms of Section 33(2) of the Goa Value Added Tax Act, 2005, considering the Assessment Order was dated March 29, 2011, and the refund was made on February 20, 2016. 2. Whether the Respondents are liable to pay simple interest at 8% per annum on the refunded amount of Rs.28,83,213.31 (input tax credit/export sales) from April 24, 2008, and July 18, 2008, respectively, in terms of Section 33(2)(a) of the Goa Value Added Tax Act, 2005, considering the refund applications were made earlier and 90 days expired from their receipt. 3. Whether the Petitioner is entitled to the claimed amount of Rs.8,51,594.88 towards VAT Input Tax Credit on export sales. Petitioner's Arguments: The Petitioner argued that Section 33 of the Act mandates interest payment if refunds are not made within 90 days of the order or application receipt. They contended that the sanction order under Rule 30 is administrative and does not affect the interest liability. They relied on the principle that interest becomes payable upon expiry of the statutory period, irrespective of administrative delays, citing precedents like Ranbaxy Laboratories Ltd. and Union of India vs. Hamdard (WAQF) Laboratories. Respondents' Arguments: The Respondents argued that Section 33 is subject to other provisions, including Rule 30 of the Rules, which requires sanction for refunds. They contended that interest liability arises only after the expiry of 90 days from the date of the sanction order or direct order under Rule 30, which was February 1, 2016, making no interest payable as the refund was granted on February 20, 2016. They argued that the Assessment Order is provisional until sanctioned under Rule 30.