CHAPTER V

REFUND AND ADJUSTMENT

Section: 36 Refund:

(1) Subject to other provisions of this Act and the rules made thereunder, the assessing authority shall, refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him.

Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956, or the Uttaranchal Trade Tax Act,1948 and only the balance, if any, shall be refunded.

(2) Where any refund is due to any dealer according to the return furnished by him for any tax period, such refund may provisionally be adjusted as per provisions under sub-section(6), sub-section (7) and sub-section (8) of Section 5.

(3) If the amount found to be refundable 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 twelve percent per annum from the date of such order or, as the case may be, the date of receipt of such order of refund by the assessing authority to the date of refund.

(4) Notwithstanding any judgment, decree or 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.

(5) Notwithstanding any thing contained contrary in this Section any dealer to whom refund of any amount is allowed, may, before the date such refund is made, apply to the assessing authority for withholding the amount of refund for adjustment towards his future liabilities either under this Act or under the Central Sales Tax, 1956. If the dealer has presented his application for withholding amount of refund, the assessing authority shall withhold amount of refund. In such a case the dealer shall not be entitled for interest.

(6) Where any amount of tax under sub-section (1) of Section 35 has been deducted from any dealer as tax payable by him for any assessment year, if annual return of turnover has not been submitted by the dealer or if the dealer has not been assessed for such assessment year, the amount deducted for the purpose of sub-section (4), shall be deemed to be tax due under this Act and shall not be refunded to the dealer.

Explanation-1: The expression” Refund” includes any adjustment under the proviso to sub-section (1).

Explanation-2: 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.

Section 37: Provisional Refund in case of Exporters:

(1) If a registered dealer has filed any return as required by or under this Act, and the return shows any amount to be refundable to the dealer on account of sale in the course of export, then the dealer may apply in the manner and form prescribed to the assessing authority for grant of provisional refund pending assessment, if any.

(2) Subject to the provisions of sub-section (3), the assessing officer may require the said dealer to furnish a Bank Guarantee or other security as may be prescribed for an amount equal to the amount of refund. On receipt of such guarantee or other security, the assessing authority shall, subject to rules, grant the dealer a provisional refund that may be found as refundable. The dealer shall keep the bank guarantee or security furnished by him valid up to the date of final assessment.

(3) The assessment under this Act of such dealer in respect of the year containing the period covered by the said return will be taken up as early as practicable and the provisional refund against tax due, if any, as a result of the assessment shall be adjusted.

(4) If, on assessment, the provisional refund granted under sub-section (2) is found to be in excess, then the excess amount of refund shall be recovered from the dealer along with interest as if it were tax due from the dealer under this Act.

(5) Interest will be charged at the rate of one and a half percent per month or part thereof, from the date of grant of provisional refund, till the date of assessment.

Section 38: Refund of Tax in case of sales to Embassies, International

Organizations and Public Organizations

Any dealer making sale to embassies, international organizations and public organization listed in Schedule IV of this Act, shall be entitled to input tax credit in respect of tax paid by him on the purchases of such goods and provisions of Section 36 shall apply in case of refund of any input tax credit in excess of his tax liability.

Section 39: Power to Withhold Refund in certain cases

(1) Where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the assessing authority is of the opinion that grant of such refund is likely to adversely affect the revenue and that it may not be possible to recover the amount later, the assessing authority may, with the permission of the Commissioner or any officer authorized by him, withhold the refund till such time as he may determine.

(2) Where a refund is withheld under sub-section (1), the dealer shall be entitled to interest as provided under sub-section (1) of Section 41 if as a result of the appeal or further proceeding, or any other proceeding he becomes entitled to the refund.

Provided that if any refund has been withheld under this Section, and if any amount out of the refundable amount is adjusted towards any tax liability of the dealer, the dealer shall not be entitled for any amount of interest on a amount so adjusted.

Section 40: Disbursement of Amount Wrongly Realized by Dealer as Tax

(1) Where any amount is realized from any person by any dealer, purporting to do so by way of realization of tax on the sale or purchase of any goods, in contravention of the provisions of Section 22,such dealer shall deposit the entire amount so realized in such manner and within such period as prescribed under Section 23.

(2) Any amount deposited by any dealer under sub-section (1) shall to the extent it is not due as tax, be held by the State Govt. in trust for the person from whom it was realized by the dealer, or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of the deposit.

(3) Where any amount is deposited by any dealer under sub-section (1) such amount or any part thereof shall, on a claim being made in that behalf be refunded in the manner prescribed, to the person from whom such dealer had actually realized such amount or part thereof, or to his legal representative and to no other person:

Provided that no such claim shall be entertained after the expiry of three years

from the date of order of assessment or one year from the date of the final order in appeal, revision or reference, if any in respect thereof , whichever is later.

(4) Where any amount has been deposited by any dealer in accordance with provisions under sub-section (1), dealer shall not be entitled to allow refund of such amount to the purchaser of goods.

Explanation: The expression “final order on appeal, revision or reference” includes an order passed by the Supreme Court under Article 32, Article 132, Article 133, Article 136 or Article 137 or by the High Court under Article 226 or Article 227 of the Constitution.

Section 41: Interest

(1) A registered dealer entitled to refund in pursuance of any order under this Act (including assessment under Section 24, Section 25,or Section 26) or in pursuance of any order by any court, shall subject to rules, be entitled to receive, in addition to the refund, simple interest at the rate of twelve percent per annum for the period commencing after ninety days of the application claiming refund in pursuance of such order till the date of refund.

(2) The interest shall be calculated on the amount of refund due after deducting therefrom any tax, interest, penalty or any other dues under this Act or under the Central Sales Tax Act, 1956.

(3) If as a result of any order passed under this Act the amount of such refund is enhanced or reduced such interest shall be enhanced or reduced accordingly.

(4) When a dealer is in default or is deemed to be in default in making the payment of any amount of tax assessed under Section 24, Section 25 or Section 26 in excess of tax admitted by the dealer, he shall be liable to pay simple interest on such amount at the rate of eighteen percent per annum from the date of such default for so long as he continues to make default in the payment of the said tax beyond the time prescribed.

(5) Where as a result of any final order the amount of tax (including any penalty) due is wholly reduced, the amount of interest if any, paid shall be refunded, or if such amount is modified, the interest due shall be calculated accordingly.

(6) Where any amount of tax payable is enhanced by any such order, interest shall be payable on the amount by which the tax is enhanced after the expiry of a period of thirty days from the date of the receipt of the notice of demand issued by the assessing authority.

(7) Where the realization of any amount remains stayed by the order of any Court or authority and such order is subsequently vacated, interest shall be payable also for any period during which such order remained in operation.

(8) The interest payable under this Act shall be deemed to be tax due under this Act.