(1) If a registered dealer has filed any return as required under this Act and return shows any amount to be refundable to the dealer on account of sales in course of export out of the territory of India, then the dealer may apply in the manner and form prescribed to the Commissioner for grant of provisional refund pending Audit and investigation to establish the correctness of the claim and consequent assessment, if any;
(2) Subject to the provisions of sub-section (3), the Commissioner may require the dealer to furnish a bank Guarantee or other security as may be prescribed for an amount equal to the amount of refund and on receipt of such guarantee or other security, the Commissioner shall grant the dealer a provisional refund that may be determined as refundable.
(3) The Commissioner may direct the assessment under section 57 of such dealer in respect of the year containing the period covered by the said return to be taken up as early as practicable and adjust the grant of provisional refund against tax due, if any, as a result of that assessment.
(4) If, on assessment the provisional refund granted under sub-section (2) is found to be an excess than the excess shall be recovered as if it is tax free from the dealer under this Act.
(5) Interest will be charged on such excess amount at the rate of two percent per month from the date of grant of provisional refund till the date of assessment.