(1) (a) Where any return filed under this Act shows any amount to be refundable to a dealer on account of sales referred to in clauses (b), (c) and (d) of section 18, the dealer may make an application to the assessing authority for refund of that amount in the manner and form as may be prescribed.

(b) As soon as may be, on receipt of the application for such refund, the assessing authority shall direct a tax audit under sub-section (2) of section 41 of the transactions pertaining to such refund as covered under the return referred to in clause (a) which shall be completed within a period of one month from the date of issue of such direction, to establish the correctness of such claim :

Provided that if there is any delay in completing the audit under this clause due to non-co-operation of the dealer or non-production of evidence as may be required to be furnished in support of the claim of refund or any other lapse on the part of the dealer, the period of such delay shall be excluded while computing the period of limitation and such period shall not be reckoned for grant of interest, if any, admissible under section 59:

Provided further that if such lapse on the part of the dealer persists without any valid reason, the assessing authority may reject the application for such refund after giving the dealer an opportunity of being heard.

(c) Where, on assessment based on tax audit under clause (b), the amount of refund claimed is found to be inadmissible or more than what is admissible, then, the claim of refund of excess amount shall be disallowed and if, in consequence thereof, any amount is found due from the dealer, he shall be liable to pay interest at the rate of two per centum per month on that amount from the date of filing of the return giving rise to the refund till the date of the assessment.

(d) The dealer may, by application made in this behalf, exercise option for grant of provisional refund pending audit, investigation and assessment.

(e) Subject to the provisions of clauses (b) and (c), the assessing authority may require a dealer exercising option under clause (d) to furnish Bank guarantee to the satisfaction of the assessing authority for an amount equal to the amount of refundclaimed.

(f) On receipt of such Bank guarantee, the assessing authority shall, subject to the procedure prescribed, grant the dealer a provisional refund of such amount as may be determined to be refundable.

(g) Where a provisional refund has been granted, the assessing authority may, after an audit under section 41 and assessment under section 42 when so required as a result of such audit, grant final refund, and the excess amount, if any, allowed by provisional refund may be recovered as if it is a tax payable under this Act and, thereafter, release the Bank guarantee furnished by the dealer at the time of grant of provisional refund, in the manner prescribed:

Provided that the Bank guarantee shall be forfeited, if -

(i) the dealer is found to have made an incorrect claim of refund against which payment has already been made; or

(ii) the dealer fails to produce evidence in support of the claim of refund;or

(iii) the refund claim is reduced by any reason whatsoever and the dealer fails to pay the excess amount of refund provisionally allowed, to such extent and in such manner as may be prescribed, and, where the refund claim is reduced, the dealer shall be liable to pay interest at the rate of two per centum on the excess amount of refund so granted from the date of such grant to the date of its recovery.

(h) Where any refund claimed is found to be admissible under this sub-section, it shall be granted within a period of ninety days from the date of application for such refund.

(2) (a) Any foreign diplomatic mission or consulate in India or the United nations or any other similar international body, as may be notified by the Government, shall be entitled to refund of tax paid for goods purchased in the State and all such refunds shall be subject to the conditions and restrictions as may be prescribed.

(b) Any person, who is authorised by the body referred in clause (a), entitled to refund thereunder, may apply to the assessing authority for such refund in the manner and within the time as may be prescribed.

(3) (a) Subject to the provisions of section 31, where a registered dealer closes down or discontinues his business and the net tax payable as a result of such closure or discontinuance of business, after taking into account the closing stock, is a negative value, the dealer shall make an application for refund to the assessing authority in such form and within such time as may be prescribed.

(b) Any refund covered under clause (a) shall be granted in such manner and subject to such conditions and restrictions as may be prescribed.

(4) (a) Where any excess input tax credit for a tax period is carried forward for adjustment against the tax due for subsequent tax period or periods and such credit or part thereof remains unadjusted even after a period of twenty four months from the close of the year to which the tax period for which the return showing the excess input tax credit relates, the dealer may opt to further carry forward the credit till final adjustment or may claim refund of the amount of such excess credit remaining unadjusted.

(b) Where a dealer opts for refund under clause (a), he shall make an application to that effect to the assessing authority within such time and in such manner as may be prescribed.

(c) Any refund covered under this sub-section shall be granted in such manner and subject to such conditions and restrictions as may be prescribed.