2021 (2) TMI 249 - HC - VAT and Sales Tax

Court orders refund of withheld amount with interest, criticizes delays in VAT refund process

M/s Dharti Quarry Works Versus State of Gujarat

M/s Dharti Quarry Works Versus State of Gujarat - TMI Issues:Challenge to decision of respondent No.4 in declining refund of recovered amount during search; Legal justification for withholding refund under Section 36 of VAT Act, 2003; Interpretation of assessment proceedings and orders for relevant assessment years; Application of Section 36 and Section 39 of VAT Act, 2003 for refund; Analysis of previous court decision in similar context.Analysis:The writ applicants sought relief through a writ application challenging the decision of respondent No.4 in declining to grant a refund of the amount recovered during a search for the period between F.Y. 2012-13 and 2015-16 amounting to Rs. 14,61,850. The respondents initiated assessment proceedings for various financial years, and the writ applicants contended that the withholding of the refund was contrary to the provisions of Section 36 of the VAT Act, 2003. The respondents passed ex parte assessment orders due to the absence of the petitioner during assessment proceedings, leading to a dispute over the appropriateness of the assessment orders and the subsequent withholding of the refund.The court analyzed the contentions of both parties regarding the assessment proceedings and orders. The respondents claimed to have initiated assessment and penalty proceedings for the relevant financial years, while the writ applicants argued that only provisional assessments were made without regular assessments, which they deemed mandatory. The court noted that there was no legal justification for withholding the refund, as it was refundable to the writ applicants in the absence of proper assessment orders for the relevant years, citing Section 36 of the VAT Act, 2003.Referring to a previous court decision in a similar context, the court emphasized the importance of adhering to statutory provisions for refunds. The court highlighted that the respondents' actions were bureaucratic and reflected red-tapism, compelling citizens to approach the court for legitimate refunds. The court directed the respondents to pay the writ applicants the withheld amount of Rs. 14,61,850 along with statutory interest within six weeks from the date of the order, emphasizing the need for timely and rightful refund disbursement.In conclusion, the court allowed the writ application, emphasizing the importance of upholding legal provisions for refunds and ensuring that citizens are not subjected to unnecessary hurdles in obtaining their rightful dues. The judgment underscored the significance of following due process in assessment proceedings and refund disbursements under the VAT Act, 2003, to uphold fairness and justice in such matters.