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Judgment
S.K. Sen, C.J.—The petitioner Trade Link India, 68 Palika Bazar, Ghaziabad through its Partner Sushil Kumar, have approached this Court by means of the present writ petition under Article 226 of the Constitution of India, seeking a writ, order or direction in the nature of mandamus commanding the respondents to refund the amount of Rs.25,000/ alongwith uptodate interest thereon under Section 29(2) of the U.P. Trade Tax Act, 1948.
The facts giving rise to the present petition in brief are that the petitioner is a registered partnership firm, engaged in the business of manufacture and sale of Gas Cylinders. It is a registered dealer under the provisions of U.P. Trade Tax Act (hereinafter referred to as the Act). On 17.1.1992, a consignment of goods, which was being transported by Truck No. M.H.12/4909, was checked by the Trade Tax Officer, Mobile Squad, Shahjahanpur. Certain discrepancies were found whereupon the goods were detained, and subsequently released only after security deposit of Rs.25,000/ in cash. The Additional Trade Tax Officer, Sector 4, Meerut, initiated penalty proceedings under Section 13A(4) of the Act, and vide order dated 27.9.1995, imposed a sum of Rs.25,000/ as penalty. By the same order, he adjusted the amount of Rs.25,000/ which had already been deposited by the petitioner on 22.1.1992 as security. Feeling aggrieved thereby, the petitioner preferred an appeal under Section 9 of the Act, before the Deputy Commissioner (Appeals) II, Trade Tax, Ghaziabad, who vide order dated 31.1.1998, allowed the appeal and set aside the imposition of penalty. He also directed for the refund of the amount, if any, deposited by the petitioner. Thereafter the petitioner filed an application on 9.2.1998 before the Trade Tax Officer Sector 4 Ghaziabad, respondent No.1 seeking refund of the amount of Rs.25,000/. When nothing was done, the petitioner sent several reminders and ultimately approached this Court by filing the present writ petition.
In the Counter affidavit filed by the respondent no.1, it has been admitted that the Department did not prefer any appeal against the order dated 31.1.1998 passed by the Deputy Commissioner (Appeals). A refund voucher for Rs.25,000/ was prepared in favour of the petitioner on 25.3.1998 and it was sent to the Trade Tax Officer, Mobile Squad Shahjahanpur on 31.3.1999 for obtaining his counter signature. However, the Trade Tax Officer, Mobile Squad, vide letter dated 20.4.1999 informed the respondent No.1 that there was no record of deposit of Rs.25,000/ in the account as claimed by the petitioner. The respondent No.1 made enquiry from the petitioner with regard to the amount which was alleged to have been deposited by the petitioner whereupon the petitioner submitted the proof. Thereafter, correspondence continued with the Trade Tax Officer, Mobile Squad, Shahjahanpur, who only on 5.3.1999 returned the refund voucher duly countersigned by him and the refund voucher was handed over to the petitioner. On account of nonpayment of Rs.25,000/within time, as provided under Section 29(2) of the Act, the petitioner claimed for payment of interest on the delayed refund, which is subject matter for consideration before this Court in this petition.
We have heard Shri M.Manglik, learned counsel for the petitioner and Shri S.P. Keshwarwani, learned Standing Counsel for the respondents.
The learned counsel for the petitioner has submitted that vide order dated 31.1.1998, the Deputy Commissioner (Appeals) Ghaziabad, while allowing the appeal filed by the petitioner, had set aside the imposition of penalty and directed for the refund of the amount deposited, if any, by the petitioner. This order was served upon the respondent No.1 by the petitioner on 9.2.1998 alongwith an application seeking refund, and since the refund was made only on 5.3.1999, the petitioner is entitled for interest at the rate of 18% per annum from the date of the order till the date of actual refund in the terms of Section 29(2) of the Act.
On the other hand, the learned standing counsel vehemently submitted that the respondents are not liable to pay any interest whatsoever on the amount of refund, as the respondent No.1 was bonafide taking steps, in accordance with law, for verification in regard to the amount alleged to have been deposited by the petitioner and thus, the delay, if any, occurred in getting the verification report from the Trade Tax Officer, Mobile Squad, Shahjahanpur, is genuine and does not warrant for payment of interest by the respondent. In support of this submission, he relied upon Rule 90 of the U.P. Trade Tax Rules (hereinafter referred to as the Rules) and urged that when a claim for refund is made, it is obligatory on the part of the Trade Tax Officer to make proper scrutiny of all relevant records and make necessary verification and is to satisfy himself that amount is refundable and only thereafter the amount is to be refunded. Thus, for the time taken in regard to completion of verification to ascertain the deposit so made by the petitioner, no interest is payable by the Department.
For a correct appreciation of the controversy involved in this case, Section 29 of the Act as well as Rule 90 of the Rules are reproduced below:
Section 29Refunds:
(1) The Assessing authority shall, in the manner prescribed, refund to a dealer any amount of tax, fees of other dues paid in excess of the amount due from him under this Act:
Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956 and only the balance, if any, shall be refunded.
(2) If the amount found to be refundable in accordance with subsection (1) is not refunded as aforesaid within three months from the date of order of refund passed by the Assessing Authority or, as the case may be, from the date of receipt by him of the order of refund, if such order is passed by any other competent authority or Court, the dealer shall be entitled to simple interest on such amount at the rate of eighteen per cent per annum from the date of such order or, as the case may be, the date of receipt of such order of refund passed by the Assessing authority to the date of refund.
Provided that for calculation of interest in respect of any period after the 26th day of May, 1975, this subsection shall have effect as if for the words ''six months'' the words ''three months'' were substituted and for the words ''six percent'' the words ''twelve percent'' were substituted.
(3)Notwithstanding any judgment, decree or order of any court or authority no refund shall be allowed of any tax or fee due under this Act on the turnover of sales or purchases or both, as the case may be, admitted by the dealer in the returns filed by him or at any stage in any proceedings under this Act.
Explanation I:
The date of refund shall be deemed to be the date on which intimation regarding preparation of the refund voucher is sent to the dealer in the manner prescribed.
Explanation II:
The expression ''refund'' includes any adjustment under the proviso to subsection (1)�
Rule 90:
When a claim for refund is made, the Sales Tax Officer shall, after proper scrutiny of all relevant records and necessary verification, satisfy himself that the amount is refundable. If no dues are outstanding against the dealer for any year, the refund voucher shall be prepared. If any dues are outstanding against the dealer for any year or if the dealer makes a request for adjustment of the refundable amount against future dues, an adjustment voucher shall be prepared for the adjustment of the excess refundable amount towards such dues.�
From a conjoint reading of Section 29(2) of the Act and Rule 90 of the Rules, it is clear that the Statute had itself taken care to afford sufficient time to the authorities for scrutinizing the record and making verification of the claim of refund and that is why a period of three months has been stipulated, after expiry of which, the interest would start running, if amount is not refunded within the said period. The manner in which the interest is to be calculated, its starting point, as also the date upto which the interest shall be paid, has all been specified in Section 29(2) of the Act. Thus, the plea of bonafide making enquiry and taking about an year in actually refunding the amount will not absolve the respondents from their liability to pay interest as per Section 29(2) of the Act. There is no justification on the part of the respondents in not paying the interest at the rate of 18% per annum from the date of order till date of refund in terms of Section 29(2) of the Act.
Moreover, the plea taken by the respondent No.1 that it took about an year for getting the verification of the amount deposited by the petitioner with the Trade Tax Officer, Mobile Squad, Shahjahanpur, cannot be accepted in as much as in the penalty order passed by the respondent No.1 the amount of Rs.25,000/ deposited by the petitioner by Bank Draft No.116848 dated 22.1.1992 with the Trade Tax Officer, Shahjahanpur, as mentioned in his letter No.358 dated 1.2.1992, has been adjusted towards the penalty. Thus, the fact regarding the deposit of amount of Rs.25,000/ could not be disputed or doubted by the respondent No.1.
In view of the foregoing discussions, we find force in the submission of the learned Counsel for the petitioner. We accordingly direct that the interest at the rate of 18% per annum from 9.2.1998 upto 7.3.1999 should be paid by the authorities concerned within four weeks from the date of communication of a certified copy of this order. The writ petition is allowed to the extent indicated above.
(Petition allowed)