2022 (12) TMI 1106 - HC - VAT and Sales Tax

Octroi refund granted despite procedural lapse, court emphasizes substantial compliance over strictness.

Hyprecision Hydraulik Versus State of Maharashtra Through the Revenue Secretary, Ministry of Finance, Department of Revenue, Mantralaya, Mumbai The Additional Municipal Commissioner, Octroi (A & C), Mumbai, The Deputy Assessor & Collector (Octroi), The Deputy Assessor & Collector (Octroi),

Hyprecision Hydraulik Versus State of Maharashtra Through the Revenue Secretary, Ministry of Finance, Department of Revenue, Mantralaya, Mumbai The ... Issues Involved:1. Eligibility for a refund under Section 194(2) of the MMC Act.2. Impact of failure to provide a declaration duly certified by the Octroi Inspector on eligibility for a refund of octroi.Detailed Analysis:1. Eligibility for a refund under Section 194(2) of the MMC Act:The petitioner entered into a contract with the Indian Navy for repair, refit, and service, which required importing spare parts. An octroi exemption certificate was issued by the Ministry of Defence, certifying that the items were exempt from octroi duty. The petitioner paid the octroi duty and later filed for a refund under Section 194(2) of the MMC Act, providing necessary documentation, including the contract, octroi exemption certificate, and goods receiving certificate.According to Section 194(2) of the MMC Act, a refund of octroi is granted if:- A written declaration signed by the importer states that the article is imported for fulfilling a specified contract with the Government.- A certificate signed by an officer empowered by the Government certifies that the article has become the property of the Government.The petitioner complied with both criteria by providing the necessary documents. The court found that the petitioner had fully complied with the substantive provisions of Section 194(2) of the MMC Act and was thus eligible for a refund.2. Impact of failure to provide a declaration duly certified by the Octroi Inspector on eligibility for a refund of octroi:The petitioner's claim was rejected by the respondent on the grounds of not providing the original declaration duly certified by the Octroi Inspector. The petitioner argued that this was a procedural lapse due to human error and that the substantive compliance with Section 194(2) should suffice for the refund.The court held that the requirement of a declaration duly certified by the Octroi Inspector is procedural and not a substantive criterion for eligibility under Section 194(2). The court emphasized that the doctrine of substantial compliance should be applied to avoid hardship where a party has done all that was reasonably expected but failed to comply with some procedural aspect.The court rejected the respondents' preliminary objections regarding alternative remedy and delay, stating that no specific alternative remedy was provided and that the petitioner had been diligently following up on the matter.The court concluded that the petitioner was eligible for the refund and that the failure to provide the certified declaration did not disqualify the petitioner from receiving the refund. The court set aside the impugned letter dated 16th December 2017 and directed the respondents to refund the amount of Rs.16,71,401/- within three months, failing which interest at the rate of 7% per annum would be payable from the date of filing the petition until realization.