IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 9009 of 2008 DATE OF DECISION: March 24, 2009 M/s J.K. Tyre & Industries Ltd. …Petitioner Versus State of Punjab and others …Respondents CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE H.S. BHALLA Present: Mr. G.R. Sethi, Advocate, for the petitioner. Mr. Piyush Kant Jain, Addl. AG, Punjab, for the respondents. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. This petition filed under Article 226 of the Constitution prays for issuance of a direction to the respondents to refund an amount of Rs. 1,19,934/- to the petitioner, which was deposited on 5.7.2000 for release of goods, consequent upon acceptance of the appeal by the Sales Tax Tribunal-I, Punjab (for brevity, ‘the Tribunal’), vide order dated 1.9.2005 (P-3). The petitioner has also claimed interest on the aforementioned amount under the provisions of Section 12(3) of the Punjab General Sales Tax Act, 1948 (for brevity, ‘the 1948 Act’) with effect from 1.12.2005 i.e. C.W.P. No. 9009 of 2008 after expiry of period of 90 days from the date of passing of order dated 1.9.2005 by the Tribunal, till the date of actual refund by the respondents. 2. Brief facts of the case are that consignment of tyres despatched from Mysore was reported on 7.5.2000 at 6.30 a.m. at Mahmadpur (Shamboo) near Rajpura. Even though all the documents were produced, the vehicle and the consignment were detained at Paragpur (Jalandhar) by the Excise and Taxation Officer (Mobile Wing) and penalty was imposed, which was paid by the petitioner. 3. The matter ultimately traveled up to the Tribunal and the order of penalty was set aside vide order dated 1.9.2005 (P-3). The petitioner sought refund of the amount deposited. On 3.1.2006, another application was filed and several reminders were given but no action was taken on the claim of the petitioner. The petitioner then filed the instant writ petition. 4. On 23.5.2008, notice was issued. In the reply filed, it has been stated that after receiving notice of the instant petition, refund of Rs. 1,19,324/- vide refund voucher dated 7.7.2008 was given to the petitioner, which was duly received on 10.7.2008. However, no explanation has been tendered why refund was not given before filing of the writ petition, though the same statutorily required. 5. On 25.8.2008, following order was passed:- “Learned counsel for the State seeks time to seek instructions on the issue of payment of interest in accordance with law laid down in the judgments relied upon by learned counsel for the petitioner being, Kashmir South Roadways (Regd.) Ltd. v. Excise and Taxation Commissioner, UT, Chandigarh and others, (2008) 31 PHT 370 (P&H), Malli 2 C.W.P. No. 9009 of 2008 Mal Sant Lal & Co. v. State of Punjab and others, (2002)- 126 STC 331, Sutlej Industries Limited v. State of Punjab and others, (2001) 121-STC-552 and OPK Woollen Mills (P) Ltd. v. State of Punjab and others, (1998)110-STC-481. List again on 22.10.2008.” 6. When the matter came up before the Division Bench on 22.10.2008, learned counsel for the petitioner apprised the Court that the amount was refunded without interest, which was against the statutory provisions of Section 12(3) of the 1948 Act, requiring the payment of interest if the refund was beyond 90 days. Learned counsel has further asserted that inspite of order dated 25.8.2008, interest has not been paid to the petitioner. After hearing learned counsel for the parties, the Division Bench made the following observations:- “10. From the above, it is clear that there is gross dereliction of duties in not making the refund for a period of more than three years and Assistant Excise and Taxation Commissioner did not take any step in the matter. Respondent No.3 Excise and Taxation Commissioner, Punjab has also failed in performing his duties and overseeing the working of the Department and also in not ensuring the refund, which is the statutory right of the petitioner. 11. There is a flow of cases of this nature in this Court and at times, it is stated that refunds are not given for extraneous considerations 12. In another petition listed today being C.W.P. No.18293 of 2008, it has been pointed out that refund has 3 C.W.P. No. 9009 of 2008 been given after seventeen years and that too without any interest. 4 C.W.P. No. 9009 of 2008 13. The above shows dismal picture of honesty and responsibility of the Sales Tax Officers responsible for giving refund. If the Department has right to recover, it cannot ignore its duty to refund the amount found to have been illegally recovered. Mechanism has to be evolved by the administration to fix accountability and responsibility for abuse of power. 14. We direct the Chief Secretary, Punjab to look into the matter and take appropriate action against the persons found responsible and also against respondents No.3 and 5 for dereliction of duties, which is patent in the present case and submit a report to this Court before the next date. 15. We make it clear that if Chief Secretary fails to comply with the order, he will be held personally accountable for the default.” 7. In pursuance of order dated 22.10.2008, an affidavit of the Chief Secretary, Punjab, dated 21.11.2008, has been filed, stating that the refund has been made to the petitioner and the Chief Secretary had a meeting with Financial Commissioner, Excise and Taxation for evolving a mechanism. The explanations of some officers have also been called and appropriate action was to be taken after considering the reply. In the minutes of meeting, dated 20.11.2008 (R-1 Colly), it has been mentioned that method and system should be in place so that right of a person to receive refund can be duly looked after. It has been further observed that monitoring system needs to be drawn up to ensure compliance of statutory provisions. The department has disposed of refund applications to the extent of 81 persons. It has been also recorded that the pending refund applications would be promptly disposed of. 5 C.W.P. No. 9009 of 2008 Another affidavit dated 25.2.2009 was filed by the Chief Secretary, Punjab, containing further progress in the matter including various short term and long term measures to be adopted by the Department which carve out various steps for streamlining the system of VAT refunds. On 9.3.2009, learned counsel for the petitioner placed on record documents showing that amount of refund alongwith interest has been released by the respondents. Yet another affidavit dated 20.3.2009 has been filed by the Chief Secretary, Punjab, mentioning that a meeting was held on 18.3.2009 and in light of the decisions taken in the said meeting, the Finance Department has issued detailed instructions dated 19.3.2009, to all the District Treasury Officers for clearing the refund orders from the treasuries within 48 hours without waiting instructions from headquarter (R-2). In view of the aforementioned factual matrix, we are of the view that the instructions dated 20.11.2008 and 19.3.2009 (R-1 & R-2 respectively), issued by the respondent-State would produce desirable result, implementing the provisions of the 1948 Act and the Punjab Value Added Tax Act, 2005 in their letter and spirit, which would pave the way for amicable relationship between the entrepreneurs and the establishment. The respondent State shall remain bound by all the affidavits and instructions. The writ petition stands disposed of. (M.M. KUMAR) JUDGE (H.S. BHALLA) March 24, 2009 JUDGE Pkapoor 6