Apurva N. Mehta, Advocate
Gujarat Sales Tax Act, 1969 – Interest admissible even where refund arises in appeal proceedings as appeal is continuation of assessment proceedings only
The Gujarat Value Added Tax Tribunal in the case of Jupiter Engineers Vs. The State of Gujarat has, in the context of the Gujarat Sales Tax Act, 1969, held that a dealer is entitled to interest on refund even where such refund arises in appeal proceedings. The contention of the revenue that such interest was admissible only when refund arises in assessment proceedings was turned down by the Tribunal holding as under :
In the opinion of this Tribunal, the assessment order passed u/s 41 includes original order passed by first assessing authority as well as modified assessment order in appeal. Under an appeal the jurisdiction of the original order appealed against is exercised and therefore the order passed in appeal is corrected/modified order under the provision under which the appealed order is passed. The order passed in the appeal against original assessment order u/s 41 is assessment order u/s 41 and the original order of assessment merges in it. The intention of the legislature cannot be presumed that the refund arises at the first stage of assessment is only eligible for interest and orders of assessment passed at subsequent stages resulted in to refund are not entitled to interest. Appeal proceedings are continuing single proceedings of assessment.
Therefore, order passed in appeal is an order of assessment u/s 41. The intention is of paying interest on refund arises in order of assessment u/s 41 and the modified assessment order passed in appeal is also covered under the clause (aa). The close scrutiny of clause (aa) reveals that the dealer is eligible for interest on refund arises in the assessment proceedings carried out u/s 41 of the Act. It is further held that the appeal is continuing proceedings of assessment and therefore the provisions applicable to the original order of assessment are also applicable to the modified order of assessment. The restricted meaning of the word “an order of assessment u/s 41” will create discrimination between the situations of the matters of similar facts, one gets refund in original stage of assessment and another gets refund in appeal. The Hon ’ble Supreme Court held that the interpretation, which leads discrimination, must be avoided. The restricted interpretation will give discretion to the first assessing authority to make available the interest to the assessee. Similar situation will take place in appeal, if the appeal is decided by remand to the first assessing authority who passes the order of assessment in form 39 following the direction and refund arises, the dealer is entitled to interest. However, instead of remanding the matter, the appellate authority decides the matter in appeal and passes modified order of assessment the appellant will be prevented from interest even though he gets refund. The interpretation, which makes the provisions unworkable, should be avoided. If the phrase “assessment order u/s 41” is not interpreted reasonably and the narrow and restricted meaning as “original assessment order” is given, considerable chaos, confusion, uncertainty and conflict would arise. The legislature never intends to deprive the assessee from entitlement where refund does not arise because of the erroneous original assessment order which modified in appeal and resulted in to refund. The appellant cannot be put to loss for the mistake of the first assessing authority or for the reasons beyond control of the appellant. The narrow and restricted meaning will defeat the purpose of clause (aa) for which it is inserted. The accepted principle in interpreting a provision is that a construction, which would defeat its purpose, should be avoided. Even if more than one construction is possible that which preserves its workability and efficiency should be preferred to the one, which would render it otiose or sterile.