State of Gujarat vs Mukti Exports Private Ltd.

Mukesh R. Shah, J.—Present tax appeal has been preferred by the appellant-State of Gujarat through the Commissioner of Commercial Taxes, Ahmedabad, against the impugned judgment and order dated January 22, 2013, passed by the learned Gujarat Value Added Tax Tribunal in Second Appeal No. 139 of 2011, by which, the learned Tribunal has allowed the said appeal preferred by the respondent herein holding that the respondent-dealer shall be entitled to interest on provisionally granted refund of Rs. 2,74,253 at the rate of six per cent per annum u/s 38(2) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as, "the Act"), subject to conditions that if the dealer has utilized carried forward tax credit while filing its return for the next period and reduced its tax liability, in that case, its claim for interest on such refund would not be allowable. The facts leading to the present tax appeal in nutshell are as under:

1.1. That the opponent herein is registered dealer under the Act and is engaged in the business trading of iron and steel. That the opponent dealer was provisionally assessed on December 31, 2007 u/s 32 of the Act, for the period 2006-07. The assessing officer granted provisional refund amounting to Rs. 2,74,253 on January 10, 2008. That thereafter, on July 26, 2010, the Deputy Commissioner of Commercial Taxes Unit 6, Ahmedabad, passed audit assessment order u/s 34 of the Act. Thus, the dealer was entitled to total refund of Rs. 3,62,892, out of which Rs. 2,74,253 was already refunded on January 10, 2008, while passing the provisional assessment order. Therefore, the Deputy Commissioner of Commercial Taxes passed an order to refund the balance amount of Rs. 88,639, however paid the interest at the rate of six per cent per annum, i.e., Rs. 17,285 on the refund of Rs. 88,639 only. That being aggrieved and dissatisfied with the audit assessment order passed by the Deputy Commissioner of Commercial Taxes in so far as not granting any interest on the provisionally refund, i.e., Rs. 2,74,253, the respondent-dealer preferred first appeal before the Joint Commissioner of Commercial Taxes (Appeals), Ahmedabad and the first appellate authority dismissed the said appeal.

1.2. Being aggrieved and dissatisfied with the order passed by the first appellate authority, the appellant preferred Second Appeal No. 139 of 2011 before the Tribunal and by the impugned judgment and order the learned Tribunal has allowed the said appeal holding that the dealer shall be entitled to interest on provisionally granted refund of Rs. 2,74,253 for the period April 1, 2007 to January 10, 2008 at six per cent per annum u/s 38(2) of the Act.

1.3. Being aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Appellant-State of Gujarat has preferred present appeal.

Shri Gandhi, learned Assistant Government Pleader, has vehemently submitted that the learned Tribunal has materially erred in holding that the dealer shall be entitled to the interest on provisionally granted refund of Rs. 2,74,253. It is submitted that learned Tribunal has misinterpreted section 38(2) of the Act. It is submitted that interest as provided u/s 38(2) of the Act shall not be payable on provisional refund. It is submitted that considering section 38(2) of the Act the dealer is not entitled to interest on the provisional refund available on provisional assessment. It is further submitted by Shri Gandhi, learned Assistant Government Pleader, that section 38 does not speak of "interest on provisional refund".

Shri Gandhi learned Assistant Government Pleader for the appellant has heavily relied upon the decision of the honourable Supreme Court in the case of Gurudevdatta VKSSS Maryadit and Others Vs. State of Maharashtra and Others, in support of his submission that where language of a particular provision is clear, categorical and unequivocal, no outside aid is required or is permissible for interpreting the proviso. It is submitted that in the present case on plain reading of section 38 of the Act, it does not provide any interest on provisional refund while passing order of provisional assessment and therefore, the learned Tribunal has materially erred in holding that dealer shall be entitled to the interest u/s 38(2) of the Act on the amount of provisional refund.

Making above submissions and relying upon the above decision, it is requested to admit/allow the present appeal.

Heard Shri Gandhi, learned Assistant Government Pleader appearing on behalf of the appellant and perused the impugned judgment and order passed by the learned Tribunal. The short question which is posed for consideration of this court is whether a dealer in whose favour provisional assessment order is passed and consequently provisional refund is granted, the dealer shall be entitled to interest on the said provisional refund as available under sub-section (2) of section 38 of the Act or not?

Section 38 of the Gujarat Value Added Tax Act, 2003 reads as under:

Interest on refund.--(1) Where refund of any amount of tax becomes due to the dealer by virtue of an order of assessment u/s 34, he shall subject to the provision of this section be entitled to receive in addition to the amount of tax, simple interest at the rate of six per cent per annum on the said amount of tax from the date immediately following the date of the closure of the accounting year to which the said amount of tax relates till date of payment on amount of said refund:

Provided that where the dealer has paid any amount of tax after the closure of the accounting year and such amount is required to be refunded, no interest shall be payable for the period from the date of closure of such accounting year to the date of payment of such amount.

(2) A registered dealer entitled to refund in pursuance of any order other than referred to under sub-section (1) or in pursuance of any order by any court, shall subject to rules, be entitled to receive, in addition to the refund, simple interest at the rate of six per cent per annum on the amount of such refund from the date immediately following the date of closer of the accounting year to which the said amount of refund relates till the date of payment of amount of such a refund. The interest shall be calculated on the amount of refund due after deducting therefrom any tax, interest, penalty or any other dues under this Act, or under the Central Act. If, as a result of any order passed under the Act, the amount of such refund is enhanced or reduced, such interest shall be enhanced or reduced accordingly.

(3) Where the realization of any amount remains stayed by the order of any court or authority and such order is subsequently vacated, interest shall be payable also for any period during which such order remained in operation.

Sub-section (1) of section 38 of the Act provides that where refund of any amount of tax becomes due to the dealer by virtue of an order of assessment u/s 34 (audit assessment), he shall be entitled to receive in addition to the amount of tax, simple interest at the rate of six per cent per annum on the said amount of tax from the date immediately following the date of the closure of the accounting year to which the said amount of tax relates till date of payment on amount of said refund. However, the same shall be subject to the proviso to subjection (1) of section 38.

Sub-section (2) of section 38 provides that a registered dealer shall be entitled to refund in pursuance of any order other than referred to under sub-section (1) (audit assessment) or in pursuance of any order by any court, be entitled to receive in addition to refund, simple interest at the rate of six per cent per annum on the amount of such refund from the date immediately following the date of closer of the accounting year to which the said amount of refund relates till the date of payment of amount of such a refund. It further provides that interest shall be calculated on the amount of refund due after deducting therefrom any tax, interest, penalty or any other dues under this Act, or under the Central Act, if as a result of any order passed under the Act, the amount of such refund is enhanced or reduced, such interest shall be enhanced or reduced accordingly.

Thus, on plain reading of sub-section (2) of section 38 a registered dealer shall be entitled to receive simple interest at the rate of six per cent per annum on the amount of such refund in pursuance of any order other than the audit assessment order or in pursuance of any order by any court. Thus, on plain reading of sub-section (2) of section 38 "order" includes provisional assessment order/provisional refund order. Under the circumstances, as such learned Tribunal has not committed any error and/or illegality in holding that the dealer shall be entitled to interest at the rate of six per cent per annum on the provisional refund, i.e., Rs. 2,74,253.

Now, so far as reliance placed upon the decision of the honourable Supreme Court in the case of Gurudevdatta VKSSS Maryadit and Others Vs. State of Maharashtra and Others, is concerned, as such there cannot be any dispute with respect to proposition of law laid down by the honourable Supreme Court in the said decision. However, on facts the said decision shall not be of any assistance to the appellant. Provision of section 38(2) is very clear and it specifically provides that a dealer shall be entitled to receive simple interest at the rate of six per cent per annum on the amount of refund in pursuance of any order other than referred to in section 38(1) or in pursuance of any order by any court and as observed hereinabove "order" referred to in section 38(2) shall include order of provisional refund. The impugned order passed by the learned Tribunal is on correct interpretation of law. We are in complete agreement with the view taken by the learned Tribunal that dealer shall be entitled interest as provided under sub-section (2) of section 38 of the Act on the amount of provisional refund also. We see no reason to interfere with the impugned order passed by the learned Tribunal. No question much less any substantial question of law arises in the present appeal. Hence, present appeal deserves to be dismissed and is accordingly dismissed.