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

(2) Subject to the provisions of sub-section (3), the Commissioner may require the aforesaid dealer to furnish such 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 Commissioner may, subject to rules, grant provisional refund to the dealer.

(3) The Commissioner may direct that assessment under section 32 of such dealer in respect of the period covered by the said return be taken up as early as practicable and adjust the grant of provisional refund against tax due, if any, as a result of the assessment.

(4) If, on assessment, the provisional refund granted under sub-section (2) is found to be in excess, then such excess shall be recovered as if it is a tax due from the dealer under this Act and the interest on such tax shall be charged at such rate, not exceeding eighteen per cent. per annum, as may be specified by the State Government by notification in the Official Gazette, for the period from the date of grant of provisional refund, till the date of assessment.