2019 (7) TMI 1342 - HC - VAT and Sales Tax

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 ... Validity of assessment order - notices of default assessment of tax, interest and penalty - Section 9 of CST Act - contention of the Petitioner is that since the period of 15 days after service of the above DVAT-41 on the OHA expired on 30th October, 2018 and no decision of the OHA was communicated to the Petitioner, the objections should be deemed to be allowed under Section 74 (9) of the DVAT Act - HELD THAT:- In the present case there can be no manner of doubt on account of failure of the OHA to pass an order within 15 days of the receipt of the notice from the Petitioner in DVAT-41. The objections filed by the Petitioner way back on 3rd March, 2011 should be deemed to have been allowed. The demand created by the VATO for the second quarter of 2009-10 stands quashed by virtue of the present order. The Respondent will now proceed to process the refund claims of the Petitioner for the said period including the later periods - The order granting refund together with the interest due on the refund amount shall be passed within four weeks and refund amount together with interest found payable shall be credited to the Petitioner’s account not later than 15th September, 2019. The failure to do so will entail the Respondents having to pay compensation of ₹ 50,000/- to the Petitioner. Petition allowed. 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.