2019 (8) TMI 1249 - HC - VAT and Sales Tax

Court deems Petitioner's objections allowed under DVAT Act, orders refund & penalty

M/s. S. Gurcharan Singh & Sons Versus Commissioner Trade & Taxes & Ors.

M/s. S. Gurcharan Singh & Sons Versus Commissioner Trade & Taxes & Ors. - [2020] 73 G S.T.R. 109 (Del) Issues Involved:1. Jurisdiction and authority of the Value Added Tax Officer (VATO) in issuing default assessments.2. Validity of the objections filed by the Petitioner before the Objection Hearing Authority (OHA).3. Refund claims and the associated interest under the Delhi Value Added Tax Act, 2004 (DVAT Act).4. Application of Section 9(2)(g) of the DVAT Act.5. Timeliness and procedural compliance by the Respondents.Detailed Analysis:Jurisdiction and Authority of VATO:The Petitioner contested the jurisdiction and authority of the VATO (Audit) to issue default assessments under Sections 32 and 33 of the DVAT Act. The Petitioner argued that these assessments lacked jurisdiction as per Section 68 of the DVAT Act read with Rule 65 of the DVAT Rules. The Court noted that the VATO (Audit) had denied the Input Tax Credit (ITC) claims based on doubts about the dealers' tax payments, implicitly invoking Section 9(2)(g) of the DVAT Act.Validity of Objections Filed:The Petitioner filed objections under Section 74 of the DVAT Act against the assessments. The Court observed that the objections were filed on 22nd July 2011, with acknowledgment receipts provided. Despite multiple notices and personal service of notices in Form DVAT-41, the OHA failed to communicate a decision within the stipulated time, making the OHA functus officio. Consequently, under Section 74(9) of the DVAT Act, the objections were deemed to have been allowed.Refund Claims and Associated Interest:The Petitioner sought a refund of Rs. 1,34,35,473/- for various periods, along with interest as per Section 42 of the DVAT Act. The Court directed the Respondents to issue the refund within four weeks, along with interest calculated in terms of Section 42. The Court emphasized that the Respondents' failure to act on repeated requests and the mandatory nature of Section 74(8) and (9) necessitated this directive.Application of Section 9(2)(g) of the DVAT Act:The Court highlighted that Section 9(2)(g) was inserted with effect from 1st April 2010 and could not be applied retrospectively. Therefore, the denial of ITC for the period ending 30th April 2009 was erroneous. The Court referenced its judgment in Lotus Impex v. The Commissioner, Department of Trade & Taxes, New Delhi, affirming that Section 9(2)(g) is prospective and does not apply to periods before its insertion.Timeliness and Procedural Compliance:The Court noted the Respondents' procedural lapses, including the failure to trace the objections and the repeated requests for self-attested copies of Form DVAT-38. The Court reiterated the mandatory nature of the time limits specified in Section 74(8) and (9) and criticized the Respondents for not acting within these limits, leading to the objections being deemed allowed.Conclusion:The Court declared the objections filed by the Petitioner as deemed to have been allowed under Section 74(8) read with Section 74(9) of the DVAT Act. It set aside the default notices of tax, interest, and penalty dated 19th May 2011 and directed the Respondents to issue the refund of Rs. 1,34,35,473/- along with the applicable interest. The refund amount, along with interest, was to be credited to the Petitioner's account by 30th September 2019, failing which an additional compensation of Rs. 50,000/- would be payable. The writ petition was disposed of with no costs.