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M/S Bal Govind Bhola Nath Construction Corp. & Others v. Trade Tax, Officer Sector-I, Alld. & Others - WRIT TAX No. 172 of 2000 [2004] RD-AH 1069 (7 October 2004)


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Court No. 37

Civil Misc. Writ Petition No. 172 of 2000

M/S Bal Govind Bhola Nath Construction Corporation.


Trade Tax Officer, Sector I, Allahabad and others.

Hon'ble R.K. Agrawal, J.

Hon'ble Prakash Krishna, J.

By means of the present writ petition filed under Article 226/227 of the Constitution of India, petitioner M/s Bal Govind Bhola Nath Construction Corporation, Allahabad has sought a writ of mandamus directing the respondents to pay due amount by issuing refund vouchers along with the interest thereon as provided under Section 29 (2) of the Act.

Briefly, stated the facts giving rise to the present writ petition are as follows :-

The petitioner is a contractor. It had entered into a contract with the Northern Railway, Allahabad in respect of which the tax at source was deducted by the Northern Railway, while making payment to the petitioner. As the contracts which were entered into by the petitioner with the Railway authorities was a civil contract, the petitioner made applications under Section 7-D of the U.P. Trade Tax Act, hereinafter referred to as the Act for the assessment years 1988-89, 1989-90, 1991-92, 1992-93, 1993-94 and 1994-95. The application filed under Section 7-D of the Act was accepted and the tax at the rate of 1% on the full value of the contract was payable by the petitioner, as the amount of tax which has been deducted at source was far in excess of the amount payable by the petitioner under Section 7-D of the Act. The Deputy Trade Tax Commissioner/The Assessing Authority passed orders of adjustment in future demands. The Deputy Trade Tax Commissioner/The Assessing Authority has found the following amount to be adjustable in the demand of future years :-

Assessment Years                                Amount (Rs.)

1988-89 to 1990-91                             7784.00

1991-92 to 1992-93                              9856.00

1993-94 44855.00

1994-95                                                 2559.00

1995-96 12753.00

When the  aforesaid amount which was found to have been paid in excess was neither adjusted, nor refunded, the petitioner made an application to the Trade Tax Officer, Sector I,  Allahabad, respondent no.1 who is assessing authority of the petitioner to grant refund along with the interest. When no heed was being paid, the petitioner was left with no other option to approach this Court by filing the present writ petition. Shri M.Manglik, learned counsel for the petitioner has stated at the Bar that after filing of the writ petition, the petitioner has been granted refund of the principal amount, but the respondents have withheld the amount of interest payable under Section 29 (2) of the Act.

As the counter and rejoinder affidavits have been exchanged between the parties, with the consent of the learned counsel for the parties, the writ petition has been heard finally and being disposed of in accordance with the Rules of the Court at the admission stage itself.

We have heard Shri M. Manglik, learned counsel for the petitioner and Shri S.P. Kesharwani, learned Standing Counsel for the respondents.

Learned Standing Counsel for the petitioner submitted that the authorities had found the amount deposited in excess for the various assessment years and had directed for adjustment of the amount in question against the demand in future years. He submitted that as there was no demand outstanding against the petitioner, it was entitled for refund and as the refund has been delayed, it was also entitled for interest under Section 29 (2) of the Act.

Learned Standing Counsel submitted that the amount deposited by the petitioner in the form of tax deducted at source was being verified and on account of delay in getting the information the refund could not be made.

It may be mentioned here 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. This Court in the case of M/s Trade Link India, Ghaziabad Vs.. Trade Tax Officer, Ghaziabad and another, 2002 U.P.T.C- 136 in Civil Misc. Writ Petition No. 316 of 1998 has held that :-

"8. 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 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."

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. 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 the next years, as it finds mention in the orders of the authorities itself.

In this view of the matter the respondents are directed to pay the amount of interest to be calculated from the date of the order of refund/adjustment passed by the authorities in terms of Section 29 (2) of the Act within 30 days from the date a certified copy of this order is filed before respondent no.1. Since the amount of refund as also the interest has been unnecessarily withheld by the respondents and the principal amount was only refunded, when the petitioner 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/- as cost shall also be paid along with the interest within the same period.

The writ petition succeeds and is allowed in part.

Dt. 7.10.2004



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