JUDGMENT R.K. Agrawal, J.
1. Regarding tax sage Ved Vyas in his famous epic Mahabharat thus said:
"State Tax be such which should not prove to be a burden on the subject; the King should behave like those bees which collect honey without causing harm to the tree."
(12/88/4) (translated by us).
2. The aforesaid golden words were reiterated by the famous economist and statesman Vishnu Gupta, popularly known as Chanakya alias Kautilya, of the Maurya period in his famous treaties "Arthashastram" written near about 320 B.C. The aforesaid golden words which fell from the pen of sage Ved Vyas and reiterated by Kautilya, is the foundation stone of State taxation in our country. However, while making the refund, this principle is conveniently forgotten by the authorities.
3. How far the Trade Tax authorities can go in order to ensure that the target fixed for collecting the revenue in a fiscal year is achieved and they are not asked to give explanation for the short fall, can be seen in the present case. While the Trade Tax authorities are at liberty to take recourse to legal means available under the U.P. Trade Tax Act (hereinafter referred to as "the Act") and the U.P. Trade Tax Rules (hereinafter referred to as "the Rules") as also other allied laws on the subject but they cannot be permitted to use extra-constitutional method in depriving an assessee of his rightful dues. While they are prompt in collecting the tax revenue, the promptness disappears and takes a back seat when the question arises on granting refund and that too alongwith interest as provided under Section 29 of the Act. This court has been flooded with the petitions filed under Article 226 of the Constitution of India seeking for a writ of mandamus directing the Trade Tax authorities to grant refund as also interest. The present petition is one such example. Time and again, this Court had expressed its concern over the indifferent attitude adopted by the Trade Tax authorities is not making the refund and refusing to pay the statutory interest but appears to have fallen on the deaf ears without taking any corrective measures in this regard. Even the conditional Order passed by the Court in one of such cases for personal appearance of the Secretary, Tax and Registration, Government of U.P., and the Commissioner of Trade Tax, U.P., Lucknow to appear or to make the refund with interest, has not shaken the Trade Tax Department as they went for the second option and avoided from personal appearance before the Court by making the refund with interest. We are constrained to observe that the Court does not appreciate this highhandedness and arbitrary attitude of the Trade Tax authorities in sitting tight over the matter where refund is to be granted and/or raising all sorts of objections and resorting to all methods on which they can lay their hands which are wholly irrelevant and extraneous and are being raised only with a view to defeat the legitimate claim for refund.
4. M/s Triveni Fuels and M/s Allahabad Fuels, the two petitioners before us, have invoked the jurisdiction of this Court under Article 226 of the Constitution of India by filing the present writ petition seeking the following reliefs:-
"(i) issue a writ, order or direction in the nature of mandamus commanding respondents to refund Rs. 3,17,720/- with interest from the date of deposit of said amount by virtue of assessment order dated 9.10.2003 pertaining to A.Y. 2002-03 (contained in Annexure No. 1) pertaining to petitioner No. 1 (contained in Annexure No. 1) and the amount of Rs. 1,80,000/- in pursuance of order dated 29.1.2004 passed by appellate authority in appeal No. 889 of 2003 to petitioner No. 1 contained in Annexure No. 2 to the writ petition.
(ii) issue a writ order or direction in the nature of mandamus commanding respondents to refund the amount of Rs. 2,14,146/- by virtue of order dated 30.9.2003 for Assessment Year 2002-03 to the petitioner No. 2 as allowed by the Assessing Authority under Rule 41(8) of the Rules (contained in Annexure No. 3 to the writ petition and Rs. 110,432/- as allowed by the appellate authority in appeal No. 639 of 2003 (pertaining to Assessment Year 2002-2003) alongwith interest from the date of deposit of said amount.
(iii) to issue any other such order or direction, which this Hon'ble Court may deem fit and proper under the circumstances of the case.
Briefly stated, the facts giving rise to the present petition are as follows: -
According to the petitioners, they are registered dealers under the Act as well as the Central Sales Tax Act. Both the petitioners are engaged in manufacture of coal briquettes and also deal in coal. The Deputy Commissioner, Trade Tax, III, Allahabad, respondent No. 3 is the Assessing Authority of the petitioner No. 1 whereas the Deputy Commissioner (Assessment), Trade Tax, Allahabad respondent No. 4 is the Assessing Authority of the petitioner No. 2. So far as the petitioner No. 1 is concerned, an assessment order under Rule 41(8) of the Rules for the assessment year 2002-2003 (U.P.) was passed by the respondent No. 3 on 9.10.2003. A sum of Rs. 3,17,720/- was found to have been deposited as excess by way of advance tax. It was found refundable to the petitioner No. 1 and accordingly in the assessment order dated 9.10.2003, a direction was given for its refund after verification. It appears that the aforesaid assessment order was passed by best judgment assessment enhancing the taxable turnover to Rs. 3.00 crores as against the disclosed taxable turnover of Rs. 2,17,01,512/-. Feeling aggrieved against the enhancement of the taxable turnover the petitioner No. 1 preferred an appeal before the Joint Commissioner (Appeals), II, Trade Tax, Allahabad who, vide order dated 29.1.2004 while partly allowing the appeal had fixed the taxable turnover at Rs. 2.55 crores as against Rs. 3.00 crores fixed by the Assessing Authority. He reduced the amount of tax by Rs. 1.80 lacs, which was directed to be refunded in accordance with law.
5. In respect of the petitioner No. 2. the respondent No. 4 passed an assessment order dated 30.9.2003 under Rule 41(8) of the Rules for the assessment year 2002-03 (U.P.). The respondent No. 4 had imposed a tax of Rs. 7,48,000/- on the net taxable turnover of Rs. 1.87 crores. He had found that the petitioner had deposited a sum of Rs. 9,62,146/- as advance tax and directed for refund of the excess amount in accordance with law after getting the challans verified. It may be mentioned here that the respondent No. 4 had made the assessment by best judgment and has enhanced the net taxable turnover disclosed by the petitioner from Rs. 1,35,92,536.50 to Rs. 1,87,00,000/-. Feeling aggrieved, the petitioner No. 2 preferred an appeal before the Joint Commissioner (Appeals) I. Trade Tax, Allahabad who, vide order dated 28.9.2004, while partly allowing the appeal, had fixed the taxable turnover at Rs. 1,59,39,205/- and reduced the tax liability by Rs. 1,10,432/-
6. According to the petitioners, as the amount of refund as directed by the Assessing Authorities (Respondent Nos. 3 and 4 respectively) as also pursuant to the orders passed by the Joint Commissioner (Appeals) was not being given, they had to make several applications and reminders but not heed was paid. The application was filed immediately after the assessment order had been passed, which was followed by reminders with further application for refund pursuant to the appellate orders. When no heed was being paid and the amount of refund was being illegally withheld for more than a year and they were made to run from pillar to post without any result, they were left with no other alternative but to approach this Court by invoking the jurisdiction under Article 226 of the Constitution of India.
7. The petition was presented before this Court on 5.11.2004 and was taken up on 9.11.2004 when the Court directed the learned Standing Counsel to obtain instructions while fixing 17.11.2004. On 17.11.2004 it was stated by the learned Standing Counsel that counter affidavit is under preparation and he shall be filing it within 24 hours. The matter was fixed for 24.11.2004 on which date on the request of the learned Standing Counsel the matter was directed to be placed before the Court on 25.11.2004 when the learned Standing Counsel produced before the Court three refund vouchers out of which the two refund vouchers amounting to Rs. 1,80,000/- dated 15.5.2004, and Rs. 3,17,720/- dated 6.11.2004, which related to the petitioner No. 1, and another refund voucher amounting to Rs. 3,22,546/- dated 16.11.2004, which related to the petitioner No. 2, were produced. The Court directed to hand over these refund vouchers to the learned counsel for the petitioners, which were duly received under protest by Sri C.L. Pandey, the petitioners' counsel. Thereafter, the counter affidavit was filed on 24.1.2005.
8. In the counter affidavit, a stand has been taken that in so far as the petitioner No. 1 is concerned, after the assessment order dated 9.10.2003 the refund vouchers for Rs. 3,17,720/- was prepared on 6.1.2004, i.e., Within three months, and the same was sent to the Joint Commissioner (Administration) Trade Tax, Allahabad for countersignature. The appellate order dated 29.1.2004 was received by the respondent No. 3 on 21.2.2004 and thereafter the refund voucher of Rs. 1,80,000/- was prepared on 15.5.2004 which was also sent to the respondent No. 5 for counter signature. The respondent No. 5 vide letter dated 19.8.2004 intimated that an objection had been received vide letter dated 13.8.2004 from the Additional Commissioner, Grade I, Trade Tax, Allahabad, to the effect that the audited balance sheet of the year 2002-03 alongwith the confidential file be sent as the turnover is above Rs. 40.00 lacs. The petitioner was asked to submit the audited balance sheet which he did not and, therefore, the refund was not given. It was also stated that the refund voucher was received from the respondent No. 5 after his counter signature on 15.11.2004 and a notice was sent to the petitioner on 17.11.2004 to receive the refund vouchers but the petitioner No. 1 has refused to receive the same. So far the petitioner No. 2 is concerned, it has been stated in the counter affidavit that a specific order for refund of Rs. 2,12,114/- and Rs. 1,10,432/- were passed on 30.10.2004 and the refund vouchers were prepared on 10.11.2004. The petitioner No. 2 was asked to receive the refund vouchers vide letter dated 17.11.2004 but he refused to receive the same. An amount of Rs. 2,032/- has not been refunded to the petitioner No. 2 for the reason that from the treasury the said amount of Rs. 2.032/-could not be verified from the check post and the said amount would be immediately refunded on submission of satisfactory evidence of deposit. The respondents have sought to explain the delay in making the refund.
9. In the rejoinder affidavit filed by the petitioners, the reason for delay has seriously been disputed and it has been stated that the explanation given is only to misguide this Court. It has further been stated that the steps for preparation of refund, according to the own showing of the respondents, was taken much after the expiry of the statutory period of three months and, therefore, the respondents are liable to pay interest as provided under Section 29(2) of the Act.
10. We have heard Sri C.L. Pandey, learned counsel appearing for the petitioners and Sri S.P. Kesarwani, learned Standing Counsel appearing for the respondents.
11. The learned counsel for the petitioners submitted that the action of the respondents in withholding the refund as directed by the Assessing Authority as also the appellate authority, was wholly arbitrary, illegal and in gross violation of the provision of Section 29(1) of the Act, which obliges the Assessing Authority to grant refund. He further submitted that if the amount is not refunded within three months from the date of the order of refund, the respondents are liable to refund the amount alongwith interest @ 18% per annum from the date of the order till the date of refund. In the present case, he submitted that as the refund had been inordinately delayed by more than a year, the petitioners are entitled for interest also in term of Section 29(2) of the Act. He has relied upon a Division Bench decision of this Court in the case of Bal Govind Bhola Nath Construction Corporation, Allahabad v. Trade Tax Officer, Sector I, Allahabad and Ors., in Civil Misc. Writ Petition No. 172 of 2000, decided on 7.10.2004. He has further relied upon a decision of the Apex Court in the case of Commissioner, Commercial and Sales Tax v. Orient Paper Mills, 2004 (35) Sales Tax Journal 481 = (2004) 9 SCC 181.
12. The learned Standing Counsel reiterated the stand taken by the respondents in the counter affidavit, as Already reproduced hereinbefore, and submitted that there is no delay on the part of the Respondents in making the refund. The respondents are not liable to pay any interest as the refund vouchers had been prepared within three months from the date of the order of refund and, if for any reason under the administrative instructions counter signature is required, which causes delay, the interest is not payable. According to him the amount of advance tax claimed to have been deposited by each of the petitioners was got to be verified and in its absence. neither refund could have been made nor there is any liability for payment of interest. In support of his submissions, he has relied upon a decision of this Court in the case of Man Power Services & Security v. State of U.P. and Ors., in Civil Misc. Writ Petition No. 1314 of 2003, decided on 16.8.2004.
13. He further submitted that against the order passed by the Joint Commissioner (Appeals), wherein the appeals filed by each of the petitioners have been partly allowed, the respondents have filed second appeals under Section 10 of the Act before the Trade Tax Tribunal, Bench III, Allahabad on 15.5.2004, which are still pending and as the matter is sub judice, the question of grant of refund pursuant to the appellate order does not arise.
14. Having given our anxious consideration to the various pleas raised by the learned counsel for the parties, we find that the following position is not in dispute:-
(2) If the amount to be refunded in accordance with Sub-section (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 percent per annum from the date of such order or as the case may, the date of receipt of such order of refund by the Assessing Authority to the date of the refund:
Provided that for calculation of interest in respect of any period after the 26th day of May, 1975, this Sub-section shall have effect as if for the words "six months'' the words "three months" were substituted and for the words "six per cent the words "twelve percent" were substituted.
(3) Notwithstanding any judgment, decree on 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 Sub-section (1)"
(4) Notwithstanding anything contained in Sub-sections 1 (1), (2) and (3), where the tax has been paid by a dealer on purchase of certain goods and the value of goods manufactured out of such goods is inclusive of such tax and the State Government remits the tax liability on such purchases retrospectively, the dealer shall not be entitled to refund of tax paid on purchases of such goods unless he proves to the satisfaction of the Assessing Authority that he has not passed on the liability of such tax to any third party as a result of any sale or otherwise."
17. The procedural part which the Trade Tax authorities have to follow while making a refund, has been provided under Rules 89 to 104 of the Rules. These are all internal procedural matters to be observed by the Trade Tax authorities and has nothing to do with, the assessee/tax payer.
18. From a reading of the provisions of Section 29 of the Act. reproduced above, we find that it is the obligation and statutory duly of the Assessing Authority to refund to the dealer any amount of tax, fee or other dues which have been paid in excess of the amount due from him under the Act. However, before refunding the amount. the Assessing Authority is enjoined upon to adjust the same towards the tax or any other amount outstanding against the dealer under the Act or under the Central Sales Tax Act and only the balance, if any, is to be refunded. The State legislature has also taken care of the delay, if any caused in making the refund. Under Sub-section (2) of Section 29 of the Act, it has been provided that if the amount found to be refundable is riot refunded within three months from the date of the 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 has been made entitled to simple interest @ 18% 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. Explanation I provides that 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. Thus according to Section 29 of the Act, if the amount which has been found refundable, is not refunded within three months from the date of the order of refund or the receipt of the order, in case the order of refund is passed by a higher authority or the Court, then interest @ 18% per annum is payable from the date of the order or the receipt of the order.
19. In the case of Trade Link India, Ghaziabad v. Trade Tax Officer, Ghaziabad and Anr., 2002 UPTC 136, this Court had occasion to consider the provision of Section 29 of the Act in which it has held as follows:-
"8. From the conjoin reading of Section 29(2) of the Act and Rules 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 up to which the interest shall be paid, has all been specified in Section 29(2) of the Act. Thus, the plea of bona fide 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 cent per annum from the date of order till date of refund in terms of Section 29(2) of the Act."
20. In the case of Bal Govind Bhola Nath Construction Corporation, Allahabad (supra), this Court has followed the aforesaid decision in the case of M/s Trade Link India (supra) and has held that under Section 29 of the Act a period of 90 days has been provided in order to enable the Trade Tax Authorities to make verification of the claim of refund and that is why the interest starts running when the refund is not made within a period of 90 days. It has further held that the plea of verification appears to have been taken by the respondents to cover up their deeds of not granting lawful refund within a stipulated period and, therefore, it is not accepted. It has further held that as the respondents have themselves refunded the entire amount which was sought to be adjusted against the demand for future years, there is no justification as to why they should not be asked to pay interest also. Moreover, there is no dispute regarding the amount of refund for these years, as it finds mention in the orders of the authorities itself.
21. We find that this Court in the case of Oriflame India Private Ltd. v. Assistant Commissioner (Assessment-1) Trade Tax, NOIDA, district Gautam Budh Nagar and Anr., in Civil Misc. Writ Petition No. 24 of 2000. decided on 8.10.2004. has directed the payment of interest where the refund had hot been given within 90 days from the date of the order. While following its earlier decision in the case of M/s Trade Link India (supra) this Court, has held as follows:-
"Respectfully following the aforesaid decision We are of the considered opinion that the respondent ought to have refunded the amount within a period of 90 days from the date of the order for refund and if the refund for any reason whatsoever has not been made within the aforesaid period they are liable to pay interest as provided under Section 29(2) of the Act. In this view of the matter as the refund has been given after 90 days from the order of refund i.e. 27th March, 1999 the petitioner is entitled for the interest from 27th March, 1999 till the date of actual refund. We are not impressed by the submission made by the learned counsel for the petitioner that the petitioner is entitled for the interest from the date of deposit as the amount of refund and interest is governed by Section 29(2) of the Act, which does not permit the refund unless there is specific order of refund."
22. This Court in the case of Mikky Coal Trader, Chandausi, Varanasi, v. State of U.P. and Ors., in Civil Misc. Writ Petition No. 178 of 2001, decided on 22.9.2004, has dealt with the preparation of refund vouchers in the following words:-
"It may be mentioned here that for preparation of the refund voucher the authorities are required only to verify as to whether the amount, which is sought to be refunded, has been deposited by the petitioner or not and as to whether there is any specific order of refund No further enquiry to produce books of account is required to be made and this appears to have been done only to avoid giving of the refund voucher. According to the respondents its revision against the order of Tribunal granting refund is pending before this Court in which no interim order has been passed and the refund order is being with-held while awaiting the decision of this Court. It may be mentioned here, neither under the U.P. Trade Tax Act nor under the Rules there is any provision which provides for with-holding of the refund order where the matter is pending before the higher Court in which no interim order has been passed. Thus with-holding of the refund order/voucher is arbitrary and is based on wholly inrelevant considerations."
23. One of us (Rajes Kumar, J.) in the case of Ratan Lal Om Prakash Cement Dealer, Khurja v. Commissioner of Sales Tax, 2004 UPTC 439, has held that if the claim to refund the amount has become due under the order of the Assessing Authority then .merely because in appeal it is modified or the appeal is dismissed, the date of the order of refund for that amount would not get postponed and it would run from the date of the earlier order. This Court has held as follows:-
"7. Tribunal and authorities below have acted illegally in holding that the interests was not payable because, refund was allowed within three months from the order of Tribunal dated 11thNovember, 1991, treating the order of Tribunal dated 11thNovember, 1991 as order by which refund was directed. In fact, refund Order was passed by first Appellate Authority on 13th March, 1986 against which, appeal was rejected by the Tribunal vide order dated 11thNovember, 1991. Tribunal has only confirmed the view of First Appellate Authority directing the refund and has not passed any fresh order for refund.
24. This Court has further deprecated the practice of the authorities in not granting refund when it became due and also non-payment of interest in the following words:-
"9. It is seen that the Trade Tax authorities are acting arbitrarily and unfairly in refunding the amount. They are expected to show promptness in realizing tax due and it he same time, they should be prompt and fan in refunding the excess amount. Normally, they try to defer the refund on one pretext or the other. It is also seen that the Trade Tax authorities acts unfairly in not paying the interest due under Section 29(2) and tried to deny for one reason or the other. Payment of interest is contemplated in the statute under Section 29(2) therefore, it is incumbent upon the authority to pay interest along with the amount refundable and as a part of the statutory responsibility. Non-payment of interest due under Section 29(2) amounts to flouting the law and not discharging its statutory obligations. Senior Officers may see that the Assessing Authority may also pay interest due along with the refund voucher and in case, if they fails to pay, necessary action may be taken against them.
25. We are in respectful agreement with the aforesaid view and the concern expressed by the learned Single Judge.
26. In the case Orient Paper Mills (supra) the Apex Court has. upheld the Assistant Commissioner's order erroneously granting Interest @ 9% on that sum, even where an assessee deposits any amount pursuant to a direction given by the High Court and subsequently the amount is refunded, in the absence of any specific direction by the High Court for grant of interest
27. In the case of M/s Man Power Services & Security (supra), this, Court had declined to grant interest oh the amount of refund on the ground that there was no specific order of refund in the assessment order dated 2.7.2002 and actually order of refund had been passed only on 18.11.2003 and the petitioner therein had received the amount shortly thereafter much within the stipulated period. While holding so the Court followed its earlier decision in the case of Indodan Milk Products Ltd. v. State of U.P. and Anr., 1983 UPTC 583, wherein in this Court has held as follows: -
"The legislature obviously intended that the interest on the amount be refunded would accrue only if the same was not refunded within three months of the order of refund made by the Assessing Authority or receipt by the Assessing Authority of such an order by any other competent authority or Court. In view of the amendment made the obligation to pay interest did not arise merely because there was some order by the Assessing Authority or any other competent authority by virtue of which the amount has eventually to be refunded to a dealer. The amendment contemplated a specific order of refund by the Assessing Authority or by any other competent authority or Court."
28. The plea taken by the respondents that the delay in refund has been caused on account of non-submission of the audited balance sheet and the profit and loss account as directed by the joint Commissioner (Administration), Trade Tax, Allahabad is not relevant consideration at all for making the refund. It may be mentioned here that the books of account and other documents had already been examined by the Assessing Authority while passing the assessment orders and there is no requirement under the Act or the Rules framed thereunder that the books of account ought to be audited, unlike the provisions of Section 44AB of the Income Tax Act, 1961. Moreover this plea appears to have been taken to further their avowed object not making the refund on one pretext or the other. Thus, the explanation regarding delay in making the refund is devoid of any substance.
29. The Apex Court in the case of Commissioner of Income Tax, West Bengal I v. Simon Carves Ltd., (1976) 105 ITR 212, has held that the taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which; is legitimately due from an assessee should remain unrecoverd, they must also at the same time not act in a manner as might indicate that scales are weighed against the assessee. We are wholly unable to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed not to have exercised it in a proper and judicious manner.
30. Applying the principles laid down in the aforesaid cases to the facts of the present case, we are of the considered opinion that so far as the petitioner No. 1 is concerned, it is the admitted case that in the assessment order dated 9.10.2003, the respondent No. 3 had passed an order of refund for Rs. 3,17,720/-. The petitioner No. 1 was informed about the preparation of the aforesaid refund for the first time only on 17.11.2004 which is much after the Expiry, of the period of three months from the date of the order of refund as provided under Section 29(2) of the Act. Thus the petitioner No. 1 is entitled for interest @ 18% per annum on the aforesaid amount from 9.10.2003 till 1.7.11.2004.
31. So far as the amount of Rs. 1,80,000/- pursuant to the order dated 29.1.2004 passed by the Joint Commissioner (Appeals) is concerned we find that even though it has been stated that the order dated 29.1.2004 had been received by the respondent No. 3 on 21.2.2004, the information about the refund being ready was sent to the petitioner No. 1 for the first time on 17.11.2004. It is also much beyond the expiry of the period of three months as provided under Section 29(2) of the Act. Thus the petitioner No. 1 is entitled for interest @ 18% per annum on the sum of Rs. 1,80,000/- from 29.1.2004 till 17.11.2004.
32. So for as the petitioner No. 2.is concerned, we find that in the assessment order dated 30.9.2003 the respondent No. 4 himself had directed for the refund of the excess amount of tax, even though he had not computed the actual amount of refund but he had noticed that a sum of Rs. 9,62,146/- had been deposited by the petitioner No. 2 by way of advance tax and the liability of tax had been fixed at Rs.7,48,000/- The amount of refund of Rs. 2,12,114/- (excluding the sum of Rs. 2,032/- which is being disputed as not verified) became refundable under the order dated 30.9.2003 itself. However the intimation about the preparation of the refund voucher for the said amount was given for the first time to the petitioner No. 2 on 17.11.20O4, which is much after the expiry of three months as provided under Section 29(2) of the Act. Thus the petitioner No. 2 is entitled for interest @ 18% on the aforesaid amount from 30.9.2003 till 17.11.2004.
33. So far the amount of refund pursuant to the order dated 28.9.2004 passed by the Joint Commissioner (Appeals) wherein he has reduced the tax liability by a further sum of Rs. 1,10,432/- is concerned we find that the respondent had passed the order of refund on 30.10.2004 and had given the intimation to the petitioner No. 2 on 17.11.2004, which is within the period of three months, as provided under Section 29(2) of the Act, Thus there is no liability for payment of interest on the aforesaid amount of Rs. 1,10,432/-.
34. Sri C.L. Pandey, learned counsel, also raised a plea regarding the liability for payment of interest on the amount of interest, which has been illegally with held by the respondent as the amount of interest has not been paid while making the refund of the amount intimated on 17.11.2004 and paid over on 25.11.2004.
35. We have given our serious consideration to the aforesaid plea and we are of the opinion that even though under the Act and the Rules framed thereunder there is no provision for payment of interest on the amount of interest illegally withheld but in exercise of our equitable Jurisdiction under Article 226 of the Constitution of India, we deem it proper to direct the respondents to pay interest at the current bank rate i.e., 10% per annum, on the amount of interest so calculated from 25.11.2004 till the date of actual payment inasmuch as the petitioners have been illegally and arbitrarily deprived of their lawful claim, for the refund of the amount which they have paid in excess over what was actually due and payable under the Act and further the respondents have also illegally, arbitrarily and without authority of law denied the interest on the amount of refund to the petitioners. The view which we are taking is in conformity with the decision of the Apex Court in the case of Commissioner of Income Tax v. Narendra Doshi, (2002) 254 ITR 606, wherein the Apex Court has upheld the view taken by the Gujarat High Court in the case of D.J. Works v. Deputy Commissioner of Income Tax, (1992) 195 ITR 227, followed by the same High Court in the case of Chimanlal S. Patel v. Commissioner of Income Tax, (1994) 210 ITR 419 and has held that the Revenue is liable to pay interest on the amount of interest which it should have paid to the assessee but has unjustifiably failed to do.
36. In view of the foregoing discussions, the writ petition succeeds and is allowed in part. As the amount of refund had already been refunded, we issue a writ of mandamus commanding the respondents to pay the amount of interest on the amount of refund as also interest on the amount of interest unlawfully and unjustifiably withheld as mentioned in the body of the judgment, within 30 days from today. Since the amount of refund as also the interest has unnecessarily been withheld by the respondents and the principal amount has only been refunded when the petitioners approached this Court by means of the present writ petition, the respondents have also exposed themselves with the liability for payment of exemplary cost which we assess at Rs. 10,000/- payable to each of the petitioners. This amount of cost shall also be paid within 30 days While making payment of interest as directed.