VAT Act, Madhya Pradesh High Court Directs Dept. To Refund Pre-Deposit With 6% Interest

The Madhya Pradesh High Court has directed the state/commercial tax department to refund the pre-deposit amount paid during the appeal with 6% interest to the assessee.

The division bench of Justice Sushrut Arvind Dharmadhikari and Justice Prakash Chandra Gupta has observed that even though there is no provision for payment of interest on the refund of amounts so collected under the VAT Act, the petitioner would be eligible for 6% interest per annum w.e.f. April 17, 2017, until the date of refund.

The petitioner had earlier filed a petition seeking the quashing of the assessment order issued by the respondents for the assessment year 2012–13 for the arbitrary levy of tax on beer under residual entry under the VAT Act, 2002, at a rate of 13%.

The writ petition was decided in favor of the petitioner, and the assessment order was quashed.

The respondent challenged the order in SLP before the Apex Court. The Apex Court upheld the order passed by the Madhya Pradesh High Court.

The petitioner sent a number of reminders to the respondent, requesting that they refund the amount that was collected from the petitioner. Since the amount was not refunded, the petitioner had no other option but to approach the High Court by filing the writ petition.

The petitioner submitted that, in spite of the order dated August 26, 2016, passed by the Madhya Pradesh High Court as well as the order dated April 17, 2017, passed by the Apex Court, the withholding of the amount by the respondents since 2016 been arbitrary and illegal. Therefore, directions may be issued to the respondents to refund the amount along with the interest.

The department contended that the petitioner was not entitled to interest on the amount due as there was no specific provision under the VAT Act for the payment of interest on a refund.

The court held that the respondent was obliged to refund the amount so collected to the petitioner immediately after the dismissal of the SLP.

The court directed respondents to refund the amount collected and withheld since 2016 along with 6% interest per annum w.e.f. April 17, 2017, until the actual date of payment.

Case Title: Mount Everest Breweries Ltd. Versus State of Madhya Pradesh

Case Citation: 2023 LiveLaw (MP) 45

Date: 23/03/2023

Counsel For Appellant: Vashistha Narayan Dubey

Counsel For Respondent: Umesh Gajankush, Pranjali Yajurvedi

Click Here To Read The Order