Court rules in favor of Petitioner on default assessment notices objection case under DVAT Act

The Court ruled in favor of the Petitioner, a registered proprietorship, in a case concerning objections against default assessment notices. Despite the Respondents' contentions, the Court emphasized the mandatory nature of the relevant provisions under the DVAT Act. The Court held that objections cannot be deemed accepted solely due to the expiration of the specified time without a decision from the Commissioner. Consequently, the demand was quashed, and the Respondents were directed to process the Petitioner's refund claims. The Court also directed the Respondents to promptly issue interest on refund amounts in accordance with the law. The writ petition was allowed, and the application was disposed of accordingly.

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Issues:
Failure of Respondents to dispose of objections against assessment order for the second quarter of 2009-10.

Analysis:
The Petitioner, a registered proprietorship under DVAT Act and CST Act, filed objections against default assessment notices for the second quarter of 2009-10. Despite submitting objections and requesting a personal hearing, the Petitioner faced inaction from the Objection Hearing Authority (OHA). The Petitioner served a notice in Form DVAT-41 on OHA, which was refused, leading to a lack of decision communication within the stipulated time period under DVAT Act.

In response, the Respondents contended that they replied to the notice and dispatched it to the Petitioner, but it was returned undelivered. The Respondents argued that the consequences under Section 74(8) and Section 74(9) of the DVAT Act would not apply as they were not inactive, and it was the Petitioner who did not respond. The Court emphasized the mandatory nature of Section 74(8) and clarified that the deeming fiction of Section 74(9) triggers only if the conditions under Section 74(8) are met.

Referring to previous judgments, the Court held that the objections cannot be deemed accepted merely due to the expiration of the specified time under Section 74(7) without a decision from the Commissioner. The failure to pass an order within 15 days of receiving the notice in DVAT-41 would result in the objections being deemed allowed. Consequently, the demand created by VATO for the second quarter of 2009-10 was quashed, and the Respondents were directed to process the refund claims of the Petitioner.

Additionally, the Court highlighted the issue of Respondents not issuing interest on refund amounts promptly, emphasizing the legal position that interest is payable from the date when the refund was due. The Court directed the Respondents to be mindful of this legal position and pass appropriate orders. The writ petition was allowed, and the application was disposed of accordingly.

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