Judgment · High Court · 2012

We have herd learned counsel for the parties.

#6. :- Since the issue is governed by Section 32, the same is reproduced below (cid:28)32. Interest on Refund - If for reasons of delay, a refund, being other than a refund under sub-section (2) of Section 30, due to a dealer under Section 30 is not made within ninety days of such refund being due, the dealer shall be entitl ed to receive simple interest from the State Government at the rate of one perce ntum per month on the amount of refund. (2) Refund under this Act shall be deemed to be due - (a) in case where the tax assessed has been reduced on appeal, revision etc. fro m the date of order of the appellate/revisional authority comes to the knowledge of the Assessing Officer; (b) in other cases, on the date an application for refund is made by the party c laiming the refund; (3) If as a result of any proceedings under this Act the amount in respect of wh ich interest is payable by the State Government under the forgoing provisions is varied, the Assessing Officer shall correspondingly enhance or reduce, as the c ase may be, the interest so payable. (cid:29)

#7. A perusal of the above shows that refund is required to be made within 9 0 days and if refund is made beyond 90 days of the refund if due and if the same is delayed, simple interest at the rate of 1 percentum per month is payable. Th e provision makes no difference whether the refund is on account of assessment o rder or on account of the provisions of the scheme. Object of the provision is t o restore loss caused by the delay in denial of use of money. Thus, interest is compensatory and equitable. The provision cannot be interpreted to reject an equ itable and compensatory claim clearly covered under the said statutory provision . In South Eastern Coalfields Ltd. Vs. State of M.P. and others, (2003) 8 SCC 64 8, it was observed :- (cid:28)21. Interest is also payable in equity in certain circumstances. The rule in eq uity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement (see Chitty on Contracts, 1999 Edn., Vol.II, Part 38-248, at p.712). Interest in equity has be en held to be payable on the market rate even though the deed contains no mentio n of interest. Applicability of the rule to award interest in equity is attracte d on the existence of a state of circumstances being established which justify t he exercise of such equitable jurisdiction and such circumstances can be many. (cid:29)

#8. We are, thus, of the view that the impugned order is against the plain s tatutory provision of Section 32 and the same is accordingly set aside. Claim fo r interest due to the petitioner be worked out in accordance with Section 32 of the Act within three months from the date of this order. The petitioner may appe ar before the concerned Superintendent of Taxes for further proceedings on Decem ber 12, 2012. Writ petitions stand allowed accordingly.