(1) If a registered dealer has filed any return as required under this Act and the 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 as may be prescribed, to the Prescribed Authority 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 Prescribed Authority 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 Prescribed Authority shall grant the dealer a provisional refund that may be determined as refundable.

(3) The Prescribed Authority may direct the assessment 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 in excess, then the excess shall be recovered as if it were a tax due from the dealer under this Act.

(5) Interest shall be charged on such excess amount at the rate of one and half percent per month from the date of grant of provisional refund till the date of recovery of the amount.