JUDGMENT
A. Pasayat, J.
1. Claim of interest made by the petitioner in terms of Section 14-C of the Orissa Sales Tax Act, 1947 (in short, “the Act”) read with Rule 40 of the Orissa Sales Tax Rules, 1947 (in short, “the Rules”) having been rejected by the authorities, this Court has been moved for interference.
2. Fact situation is almost undisputed. Petitioner was assessed to sales tax for the assessment years 1988-89 and 1989-90. On the basis of orders of assessment dated August 2, 1991, petitioner was found entitled to refund of Rs.16,286.30 and Rs.14,51,919 respectively. Refund applications were filed on August 31, 1991 and the amounts in question were paid to petitioner on April 7, 1992, vide refund payment order-cum-payment advice Nos. 1351 and 1353 of the said date. After receipt of refund vouchers, Sales Tax Officer, Rourkela I Circle (opposite party No. 3) was moved by petitioner for payment of interest. Interest was claimed on the total amount of Rs. 14,68,226 in terms of Section 14-C of the Act read with Rule 40 of the Rules, on the ground that payment having been made beyond 90 days it was entitled to interest at the rate of 18 per cent for the first ninety days and at the rate of 24 per cent thereafter. According to it, applications for refund were filed on August 31, 1991, and the refund payment order was issued on April 7, 1992 and therefore interest was payable. Since no action was taken, petitioner filed applications before the Commissioner of Sales Tax, Orissa (opposite party No. 2) on July 28, 1992 with a prayer to grant statutory interest. This Court was moved for a direction to the Commissioner to dispose of the applications for grant of interest. By order dated August 28, 1992, in O.J.C. No. 5728 of 1992 this Court directed the Commissioner to dispose of petitioner’s applications, if pending within three months from the date of receipt of the order. Another application was filed by the petitioner on August 26, 1992, along with a copy of this Court’s order. By the impugned order dated November 12, 1992, the Additional Commissioner of Sales Tax has rejected the application on the ground that Section 14-D deals with power of the Commissioner to withhold refund, and every delay can be construed to be a period during which the refund is withheld under Section 14-D of the Act, and Section 14-C cannot function independently of Section 14-D. The expression “further proceedings under the Act” refers to consideration of papers from stage to stage. Since the dispute is relating to legality of conclusions of the Additional Commissioner it is appropriate to quote the relevant portion.
“It may be mentioned here that under the Orissa Sales Tax Act the claim and grant of refund is a proceeding and because several records are to be put together before merit of a claim is properly appreciated and such records are available not in one office but sometimes in different offices and in connection with different proceedings, to get them together as and when required is not possible. Moreover, delegation of power to refund has been made to different authorities by stipulating financial limitations. The Commercial Tax Officer can refund up to Rs. 5,000, the ACCT up to Rs. 10,000, the Additional C.C.T. up to Rs. 20,000 and the Commissioner can grant refund for any amount without restriction. This scheme of delegation is also causing delay. It may, however, be seen that the passing of the papers from stage to stage is in pursuance of ‘further proceedings under the Act’. Therefore, every delay can be construed to be a period during which the refund is withheld under Section 14-D of the Orissa Sales Tax Act. Section 14-C cannot function independently of Section 14-D and therefore, Commissioner can perhaps order the period of delay for which interest has been claimed by the petitioner as a period during which the refund was withheld under Section 14-D of the Orissa Sales Tax Act. In the premises, the period of alleged delay is treated as a period during which the refund is withheld under Section 14-D of the Orissa Sales Tax Act and hence, no interest is payable under Section 14-C of the Orissa Sales Tax Act as claimed.”
3. Learned counsel for the petitioner submitted that the conclusions of the Additional Commissioner are utterly fallacious and the petitioner is entitled to interest. Counter-affidavit has been filed on behalf of the Commissioner of Sales Tax and the Sales Tax Officer, and the learned counsel for the Revenue with reference to that has supported order of the Additional Commissioner.
4. Sections 14-C and 14-D are relevant for the purpose of appreciating rival contentions. They read as follows :
“14-C. Payment of interest on refundable amount.–Amounts refundable under Section 14, if not refunded within ninety days from the date of receipt of the application in that behalf from the dealer, shall carry interest at the rate of eighteen per cent per annum for the first ninety days and thereafter at the rate of twenty-four per cent per annum, with effect from the date of expiry of the period specified above.
14-D. Power to withhold refund in certain cases,–Where an order giving rise to a refund is subject-matter of an appeal or further proceeding under this Act, the Commissioner may, if he is of the opinion that the grant of refund is likely to adversely affect the revenue, withhold the refund till such time as he deems proper.”
A bare reading of the provisions shows that the conclusions of the Additional Commissioner are frivolous and utterly fallacious. Section 14-D has no application to the facts of the case at hand, because no order giving rise to the refund was subject-matter of any appeal or further proceedings under the Act. The expression “further proceedings under the Act” appearing in Section 14-D cannot by any stretch of imagination have any relevance so far as disposal of the application for refund is concerned. Section 14-D comes into operation where the grant of interest is likely to adversely affect the revenue, and the order giving rise to a refund is the subject-matter of an appeal or further proceedings. The conclusion of the Additional Commissioner that passing of papers from stage to stage is in pursuance of further proceedings under the Act, shows complete non-application of mind, and if we may say so, reflects complete ignorance of the statutory provisions. Use of the expression “can perhaps” in the quoted portion of the Additional Commissioner’s order shows that the Additional Commissioner was not sure whether such an action is permissible. Conclusions are indefensible and accordingly we quash the order of the Additional Commissioner vide annexure-5. Taxing authorities are supposed to be watch-dogs of the Revenue and not bloodhounds. Unfortunately Additional Commissioner has come to conclusions, which reflect undesirable anxiety to deny an assessee, what was legitimately due to it. We direct that interest due to the petitioner be paid forthwith, not later than one month from today. Since loss to the State Exchequer has been caused on account of inept handling by the authorities, we direct Government in the Finance Department to fix up responsibility and take appropriate action against the erring officers.
The writ application is accordingly allowed with costs. Hearing fee is assessed at Rs. 500 (five hundred).
S.K. Mohanty, J.
5. I agree.