2014 (2) TMI 960 - HC - VAT and Sales Tax

Court rejects VAT Department's appeal, orders Rs. 2,55,11,598 refund to petitioner. Prompt refunds emphasized.

Ikea Trading (India) Versus The Value Added Tax Officer And Another

The High Court rejected the VAT Department's appeal against the petitioner's refund claim of Rs. 2,55,11,598 due to a delay beyond the limitation period. ... Denial of refund claim - Objection on assessment not considered within stipulated period - Held that:- what the respondent has done was that instead of granting the refund they had raised demands equivalent to the refunds claimed vide four separate default assessment order Nos. 1539-1542, all dated 23.02.2007. According to the petitioner these default assessment orders were time barred. Anyhow, the fact of the matter is that the Tribunal has set aside these demands and has ordered accordingly. The consequence of which would be that the refund claims of the petitioner were to be allowed as prayed for. Despite this the respondents have not paid the refund amounts. Going through the provisions of the statute it becomes clear that the refunds are to be paid promptly and the decisions are to be taken as per the time schedule prescribed in the Act - Amount to be refunded subject to furnishment of bank guarantee - Decided partly in favour of assessee. Issues:1. Refund claim by the petitioner against the VAT Department.2. Interpretation of statutory provisions regarding the time limit for deciding objections in VAT proceedings.3. Dispute over refund claims and default assessment orders.4. Compliance with court orders and conditions for refund.Analysis:1. The petitioner claimed a refund of Rs. 2,55,11,598 from the VAT Department, based on successful arguments before the VAT Tribunal. The Tribunal directed the refund, but the Department's appeal was rejected by the High Court due to a delay beyond the limitation period and lack of provisions for condonation.2. The petitioner argued that the Department must refund the claimed sums as per the Tribunal's order. However, the Department contended that a retrospective amendment allowed the Court to condone the delay, and the provision for deciding objections within eight months was held as directory, not mandatory.3. The Court noted that despite previous orders, the refunds were not granted, and default assessment orders were raised by the Department. The Tribunal set aside these demands, ordering the refund. The Court emphasized the prompt payment of refunds as per statutory provisions, criticizing the Department for delaying payments.4. Following a Supreme Court remand order, the High Court directed the refund of the deposited amounts to the petitioner, subject to conditions. The petitioner was required to furnish a bank guarantee, an indemnity bond, and other security within six weeks to receive the refund, considering the unsettled nature of the appeal and the need for compliance with court orders.This detailed analysis of the judgment highlights the key issues, legal interpretations, and the Court's directions regarding the refund claim and compliance with statutory provisions and court orders.