The High Court · 2025

Counsel for the Petitioner: SRI K.VASUDEVA REDDY Counsel for the Respondent no.1: GP FOR REVENUE Counsel for the Respondent no.2 & 3: SRI T.CHAITANYA KIRAN, REP. SRI SWAROOP OORILLA, SPL. GP FOR STATE TAX The Court made the following: ORDER IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD HONOURABLE SRIIUSTICE P.SAM KOSHY AND HON'BLE SRI JUSTICE SUDDALA CHALAPATHI RAO WRIT PETITION NO.5529 of 2010 DATE:77.72.2025 Be tween: \'[/ s. Dhar.rmptrl I)romcharurl [.imitcrl, Pkrt No L-1, Slilakshnri Nagar, I-l) Nag,rr, H1,clt:rabad, rep. bv its Manal;r.r. Govclnnrerrt of i\.1)., rc1.r. [rr Prl.Stcrc,talr', Rer.ertuc Dcpartnrcrrf Scclr't.rli.tt Btrildinl;s, r\. P., HlciclaLrar{ arrrl tn,o otlrt,rs. Petitioncr Respondcnts ORDER: (per Hon'blc iri lusticc StrLltlnln Clutlnpillil Rno) 1'his prcser.r t u,rit peti tion has heen f iled challenging the impugrred endorscmcnt z,irlrr'[ irr No.28103650204, datecl 23.70.2009 issued by the 3,.1 resporrclent, as illegal, arbitrary and set aside the sarne ancl conscquelltlv, to clircct the rcspondents to pay the interest to the petitioner-conlpany as) | per month on the amount of < 67,65,603/- ({ 67,65,903/-) for the period from 12.03.2008 to

27.06.2009. 2 'fhe brief facts leading to tiling of the present writ petition is that, petitioner-company has bcen engaged in manufacfuring of 1 cherving tobacco anci othcl alliecl proc{ucts in the brand name of - 'ilABA'. Tlrc [)(,titi(),rcl is or-tc ol tl'rc rcputt'd atld leading rna nrr f actu rc'rs of toba('co Prorlucts anrl it is having [,ranches all ove-r Inrli.r. IruItht,r'. che'r.r'rrr1,, Iot-,,rcco \^,;1s 1'vc'tnptccl ir()t]r [.1\ as p€'l Etttrv- -17 of tlrt I ScherluL-'to the .\.P. V.\l Act, l0()5 i'irh'G.O.N4s.No.933, ilatorl (13.07.2t)07 and ti-re' srunc \\rds L,rouglrt unclcr tht'net of tar.ition .(l l2 -9; \r.c.f . 06.07.20()7. -l he autlroritit's collcctt'rl tax fror-n thc petitiorrer-com Lrilnv ior .ln artl()unt of t 67.65.60 i L for Ihc nrorrths of Julv ancl ,,\rrgust, 2007 un.le'r Vi\ i ct CiS I sep.rra[c11,. l hough pcIiti()nL.r has rrot col'et-tt,cl .urv sales tax in the sa]e' 11\ oiccs rarst'ci Lrt' it, thc petitioncr w,as f()rced io 1-rav tlrt' sernle. FLrrthcr, it is contcnclecl that str bst:q u c'r1tl)', the l't rcsporrclcnt has issuccl C,.O.N'ls.Ntr. l{22, claterl 08.11 2007, cltrrifi,ing that C.O.Ms.No.933, clahcl 03.07.2007, n,oultl becorno opr'r'ative or1h, w.e .f . 0l -09.20()7 arrcl Lrv the saicl G.O., the're n as no Iiabilit,, on thc part of the pctitiorlcr to Pa)' VAT on the transactiorrs nracle bv it c-luring thc uronths of Juty and r\ugust, 2007, that as a resuIt of the said clarification issucd by the I't respondent clak cl 08.1 1.2007, the amount of tax payable by the petitioner is to be rcfunded as thc arnount was collected bcfore thc effectivc date Furlher, conscquent to the said notification issued by the 1't / ---7.; -) respondelrt, the petitioner company has filed form VA'I-213 before the 3..1 respondent on 11.12.2007 for refund of tax amour.rt paid by it for thc. nronths of July anrl August, 2007, amounting to a total sum of I 67,65.603 / - tort,ards AIr VA'l irucl also CS'l'. pursuarrt to several reprc.seltta tions, the saicl .rn1ourlt u.rongly collectecl was refunded to t[.rc pe.titioner-companv on 27.06.2009 only i.e., after more than 15 rnonths of submission ol form !'A l--213

3. lt is furthcr contcnclecl that, the said amour.rt of 167,65,603/- \4/as paic'l to the petitioncr or"r 27.06.2009, hut, however, the intercst part or1 the said amoultt h,as not [,.rid fror-n the date of filing VAT-213 on11.72.2007. Further, it is contenclecl that the Scction 38 of the Ap VAI Act,2005, manclatcs that arl excess p;rid tax lras to be refunded w,ithin a period of 90 da,vs from thc rlatc of filing of claim made under VA'I-213 and that though VAl-213 form was subrnitted on

11.12.2007, the excess paid amount ouglrt to have refunded on or before 12.03.2008. However, thc said exccss refund was only paid on

27.06.2009 after 15 morrths fror.n the clate of expiry period under Section 38 of the Act and in pursuance of Section 38 of VAT Act, 2005 read with Rule 35 (8) of AP VAl' Itules, 2005, petitioner is enritled to interest @ 7% per month from the expiry of 90 days on the refuntied .+ tax i.r.., from 12.03.2(l0B to 27.06.2009. Therefore, in vierv of the pror isions of .\P \',\ I \t.t, tntcrt:st has to bc computccl or-r t['rc said ar-urrlrr.,t .ri 1 '1,, pt'r rrronth .rl tcr lapsc of 90 d.rys .tnt1 tholrgl'r the rcprr,scnLatiorr suL,mir,tcrl [,c'lore tlrr' 3r..1 1e5p]lruclt)nt or-r 11.07.2009 rcqrrestinll th(, Jrll r(\sP()nrlent to parY irrtcrest (,1 l?i, pe'r ttrotrlh bt'r,ottc1 90 cl,tvs p('riocl, Lttrl.ot'ttttralt'ltr, 1111' jul rt'spotrclclrl 1'pjt'clet{ t6e p.r\ nr(llt ()l'rrtcr(,sl ,,rrlt' impugtrccl ('r1d ors('nrcr-rt d;rk'd 23.10.200c). It is tontt,ntlt'd that tl-oLrlgh thc provisions of i\[' \'',\ I r\ct anrl tl-re Rulcs nratlt: Urcrt' unrlcr .rrc ver)' spcci[ic, iht: irrpttglll-.1 r.rrrlt,r'sr.'nrcnI is in 111-oss violation of thc' provisiot-rs. Il is contt'nc]ed tl'rat thc lespondc.nts avoicle'r[ to p.rv the intcrcst <ur thc saic] rctuud rrl lar bv r'.rrsirrrl tet lrnical objcctions, tvhich arc uot tt'tt.rb[e arrrl thus, tlic pt,Iitiont,r' pl'ayt'J ior grarrt of intcrcst itr pursuantr'of Scctitln 38 ol.\'.\ | r\cl 17'rr'IiLrle 35(li) ol the V,.\l Rules,2005.

4. Pcr cLttlnt, N,Ir. I'.Chaitar-rya Kiran, k'arnccl counscl reprcsenting N4r. Srvarc,,,1, ()ori,la, learrred Specitrl Covernment I'leader rt'oulc-l con tencl that irr fact, the procedure prescribcd for rcfund of tax reqrrires sulrnrissior of the requisite forms and that the petitioncr lras not filec] appropriate forms before the authorities for clainrir-rg such re'frrnrl. ln that 1,ie1y of thc matter, ar-rtl having rellarcl to the dela1, ) involved, the learned Assistant Gover.ment pleader submits that the impugned endorsemerrt IS proper and valid and the that writ petition, being devoicl of rncrits, is Iiable to be clismissed

5. I leard N4r. K.Vasucleva Rr.c1cly, learrred counsel for petitioner arrd Mr. T.Chaitanya Kiran, icarned counsel representing Mr Swaroo;-r Oorilla, learnecl Special Goverument Plcader for State Tax for respondent Nos.2 ancl 3, and having qivc.n earnest consideration of their submissions, pcrused the rnatcrial on recorrl. 6 re only point that falls for t'orrsidcration bcfore this Court is, whether the petitioner is entitlecl for rnterest on the excess tax collectecl by the responclents in pursuance of Section 38 of the VA'f Act and r/w, Rule 38 (5) of the VAl' Rules, 2005 7 tividently, the G.O.Ms.No.1422 clakd 08.11.2007 was issued by the lst respondcnt clarifying that G.O.lvls.No.933 dated 03.07.2007, r'vould bc coming w.e.f. 01 .09.2007 anci that for thc clisputed period of July and August, 2007, the respondents havc collected excess amount from the petitioner to a tune of < 67,65,603l-. Further the VAT-213 forrns for refund was made on 77.12.2002, the said excess amount was refunded only on 27.06.2009 aftcr 18 months approximately from 6 thc date of V,.\'l--2l3 ,rpplicatrorr of tho petitiorlcr. J'ho provisions of - Scctiorr 38 ol tht. A['\,.\f Act r'/rv RLrlc 35(8) ol the ]l.Lrlcs rnarlt_. there untlcr, clc.l'lv cnvls.lllcs that in thc cr.t rrt of rron-refund of cxr.ess tax .urr)L1nI u,ithrn .r p€.r'io11 ol c)0 rlar,s irom the clate of filirrs oi thc aPPr()l)rialtL' .rppIic.ttlrrn in Iiorrn Vr\ l-213, thc respondenis are ]iable to pa1 i111',"tt tax (r, 1",, 1-rc1'nr()nth ol-l the refur-rcl tax ior thc delar,e-r1 perio!i. For Lrt'ttcr rrr.tlcrst;rnrlirrg, Section 38 (6) of AI, Vn L\ct,2005 antl I(rrlt, ji ol tlit ,\l'\'r\ I Rult:s,2005 arc. extractcd as undcr " Sec.3ll. l(efund of tax: (l) h, (,, \\\\ (6) \\'lrelc thc au Ilroritv prescribecl fails to makt: .r ref und rvithrn thc tirrt s1-.rccifir.d uncler sub-scction (1), thc'arnount ,,f relunrl sh.rll . alrl' sintpic i111pr"a1 at the rtrte oi onc lrc.r.ct.nt Pcl nrrrnth on []re amotrrrt of the refuntl for the periocl of ..iel.r r .' Ilule 35. Procerlure for refunds: (t) kr (7) rxrr Rulc 8. a) Wlrele the \rAT dealer makes a clairn under Section 38, str.-h rcfunil shall be made ia,ithin a period of ninctv days oi the date thc refurn was due or the clate the leturrr is lile'cl rvhichever is later. b) \{hcre the \r.\ I dealer Iails to p..rr.oduce accounts ol records re.quiretl b). tl.rc arr thor.i11, prescribed u,ithin seven da1,s of 1 date of issue of the notice, thc time Iirnit specified in clause (a) shall not apply. c) lVhere, the VAT ilealer h;rs produccd accounts or rccorc{s x'ithin the prescriberl tirnt Irmit, interest sl-rall bc payable at tht: rate of one percent (1 92") peL month from tlit, clate trftel tl're c\piry of thc'ninct_1, days till the date oi actuai rcfurrd. lhe interest in respect clf part of rnonth shall be computcd proportiorlately and for this purps5s, rnonth shall mean a preriod of thirty dal,s."

8. [n that vit,w of the rnatter, as the provisions of AP VAf Act ancl tl-re Ruk:s madc there undcr are very spccific in respect o[ the intert-'st for thc delaycd amount collected Lr), the rt'sponclents, the petitioner is cr.rtitletl to intercst under the said provisions of AP VA I Act and the Rules macle thcre under, the pctitioner is er-rtitlcd to intcrest at the late o[ 196 per nronth on the total refund amount oI < 67,65,603/- frorn the expiry of 90 clays from the clate of filing thc VA1'-213 trpplicirtiorr on 11.12.2007, i.e., from 12.03.2008 ti\\27.06.2009, the date on which the refur-rd was acfuallv made

9. It is needless to say that period of 90 days is excluded for paymcnt of interest on refund of tax as the said provisions itself envisage that if it is not paid within the 90 days from the date of making an application. 8 I 0. lrr that vicr,r, of tht mat[r.r, resl'ronc]ents ale hercby directccl to pav interest '.I) l()1. fre r tnotrth 6tr rcfutlcl of excess tax of { 67,65,60j / - af tcr l.r;-,5s oi 90 clavs [r,rr-n t]re. clatc of rnakinri VAI'-213 applic.rtior-t t'l.ric'tl lt.l22()0; ie., lrorn 1203.20i)8 to 17.06.2009 bv p;r55111t apprtrpriatc tr rtlcrs I L. '\ccorttirtqh,, irtc \'Vrrt Pt'titiorr is allor,r,ecl. lhc irnpurltrctl enrlorsr:mc,r-r t ,.l.llcd ll.l().?()09 is hcrt bv set arsitlc and th(, respontlcnt authorrtic.s .rr(' (lirL.( i.r,Ll to p,r1 thL- acrruL.({ interest lor thc tlc.lavtcl p.1\ nl.nt oi r-.'1uncl fr r. llrc rr'sPr'rtivc. pt'riotl Il-rere slr.rll l. r' n() or(1(,r .rs t() ('osts. Itncling \lisccll.rncorrs ApprILt.rtions, if anr', shall stanri closeri. That Rule Nisi has made Absolute as above witness The Hon'ble SRI APARESH KUMAR SINGH, The Chief Justice on this Wednesday. the Seventeenth Day of December, Two Thousand and Twenty Five. To, //TRUE COPY// SD/-4, JAYASREE SISTANT REGISTRAR FFICER 1 2 I he Secretary. Revenue Department, Secretariat Brlildings, T.G Hyderabad lhe Comrrrssroner of Comnrercral Taxes, T.G. Commercial Tax Comples, M J Road Hyderabad

3. The Commercial Tax Officer, Complex Nampally Hyderabad 1 Saroornagar Circle-lll Floor [/anoranjan

4. One CC to SRI K VASUDEVA REDDy, Advocate tOpUCl 5. Two CCs to SPL Gp FOR STATE Telangana at Hyderabad [OUT] Two CCs to GP FOR REVENUE, High Court for the State of Telangana at Hyderabad [OUT] TAX, High Court for the State of 6 7 BSR BS Two CD Copres HIGH COURT DATED: 1711212025 ORDER WP.No.5529 ot 2010 ( ,rt 1 i-)'tl .J\ .-. \\* ''\Qts-\:. P,^TCt il., "':, tr), * ALLOWING THE WRIT PETITION, WITHOUT COSTS @ L 3 3