2023 (12) TMI 742 - HC - VAT and Sales Tax

Court Orders Refund of Excess Tax with Interest Due to Jurisdiction Overreach by Refund Officer.

GET and D India Limited Versus Deputy Commissioner (ST)

The HC directed the respondents to refund the excess tax amount of Rs.2,06,22,234/- along with interest to the petitioner, as per the refund order dated ... Refund of excess tax alongwith interest - Power to re-quantification or re-adjudication after the sanction of refund - it is contended that in spite of refunding the excess amount in terms of the order dated 22.09.2022, the refund Officer had issued the said impugned notice beyond his jurisdiction - HELD THAT:- It appears that the refund order was passed on 22.09.2022 whereby the 1st respondent had determined the excess tax amount available with them to an extent of a sum of Rs.2,06,22,234/-. Pursuant to the said refund order, the petitioner had filed a refund application before the 1st respondent. At this juncture, the respondent had once again issued a notice to the petitioner and called for the particulars, as if, he is going to revise his own order. As far as the 1st respondent is concerned, he has already assessed the excess tax amount and passed the refund order dated 22.09.2022. Having passed the same, the 1st respondent cannot issue the impugned notice dated 24.01.2023 without any provision of the law much less in terms of the Section 42(5) of the Act, and thereby the petitioner is entitled for the refund - there is no doubt that the first respondent had issued the said notice beyond the scope of his jurisdiction, since in the course of processing of the refund application, the 1st respondent is not empowered to re-adjudicate or re-quantify while passing the refund order. This Court is inclined to direct the 1st and the 2nd respondent to refund the excess tax amount lying with the department to an extent of a sum of Rs.2,06,22,234/- along with interest as per the refund order in CST No.50806/2013-14 dated 22.09.2022. The said exercise is directed to be completed on or before 05.12.2023. Post this matter on 08.12.2023 under the caption 'for reporting compliance'. ISSUES PRESENTED AND CONSIDERED 1. Whether a refund officer, having passed a refund order determining an excess tax amount under Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006, may, in the course of processing the refund application, issue a notice to re-determine or re-quantify the same amount without any statutory basis. 2. Whether an internal administrative circular requiring higher-level approval for refunds exceeding a monetary threshold may be invoked to justify re-adjudication or re-quantification of an already-passed refund order. 3. Whether the petitioner is entitled to mandatory direction for payment of the determined refund amount with interest, and the scope of judicial direction where the respondents have not effected the payment despite the refund order. ISSUE-WISE DETAILED ANALYSIS Issue 1: Power of refund officer to re-quantify after passing refund order under Section 42(5) Legal framework: Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006 empowers assessment/authorities in relation to determination and grant of refund; the statutory scheme contemplates assessment/quantification of excess tax and consequent refund processing. Precedent Treatment: No judicial precedents were relied upon or cited in the judgment; the Court decided the issue on statutory interpretation and record before it. Interpretation and reasoning: The Court noted that once the refund order dated 22.09.2022 had adjudicated and determined the excess tax amount (Rs.2,06,22,234/-), the role of the refund officer in processing the refund does not extend to re-adjudication or re-quantification of the amount determined by that order. Issuance of a fresh notice calling for particulars 'as if' to revise the officer's own already-passed order was held to be beyond the scope of lawful processing. Any perceived defect in the earlier assessment would have to be addressed by invoking statutory mechanisms such as reassessment or revision - not by unilateral re-quantification during refund processing. Ratio vs. Obiter: Ratio - The holding that a refund officer cannot re-quantify or re-adjudicate an amount already determined by a refund order in the course of refund processing is a core legal conclusion applied to the facts. Conclusions: The impugned notice issued to re-determine the refund was beyond the refund officer's jurisdiction and therefore invalid. The petitioner is entitled to the refund as quantified in the refund order. Issue 2: Effect of administrative circular requiring higher-level approval for refunds above a threshold Legal framework: Administrative circular (dated 07.10.2020) provides internal procedure that refunds exceeding a specified monetary threshold (Rs.25,00,000/-) require approval of a higher authority (Joint Commissioners, Large Taxpayers Unit). Precedent Treatment: The Court treated the circular as an administrative instruction; no prior authorities were invoked to alter its legal effect. Interpretation and reasoning: The Court accepted that the circular imposes an internal approval step for refunds above the threshold but distinguished that administrative supervisory/approval requirements do not confer power to re-adjudicate or re-quantify an already-passed refund order. In other words, the circular may govern internal sanctioning and payment procedures but cannot be used as a legal basis to reopen or alter a concluded adjudicatory determination without invoking the appropriate statutory remedy. Ratio vs. Obiter: Ratio - Administrative direction for approval does not validate substantive re-determination of an already-issued refund adjudication; this limitation on administrative practice was treated as a binding conclusion for the case. Conclusions: The respondents cannot rely on the circular to justify issuing a notice that amounts to re-adjudication; the circular may only channel the sanctioning/approval process for payment, not substantive re-quantification of the refund order. Issue 3: Entitlement to mandatory refund with interest and appropriate judicial remedy where respondents delay payment Legal framework: Section 42(5) contemplates interest on delayed refunds; administrative law principles permit mandamus or mandatory directions to public authorities to comply with statutory orders where no adequate alternative remedy exists and the authority has failed to act. Precedent Treatment: No specific precedents were cited; the Court applied general principles of enforcement of statutory rights and compliance with adjudicatory orders. Interpretation and reasoning: The Court observed that despite the respondents' assertion that they were in the process of refunding, no effective steps had been taken. Given that the refund order had already quantified the excess tax and prescribed interest under the applicable provision, the Court was satisfied that direction for payment was appropriate to protect the statutory entitlement and to prevent administrative inertia from defeating the refund order. Ratio vs. Obiter: Ratio - The direction to refund the quantified amount with interest and to complete the exercise within a specified timeframe is a dispositive remedial holding in the case. Conclusions: The petitioner is entitled to refund of the determined amount along with interest in accordance with the refund order and Section 42(5). The Court directed respondents to effect payment by a stated date and to report compliance, with a further direction for personal appearance and explanation in case of non-compliance. Cross-References and Interaction of Issues The Court's conclusions on Issue 1 and Issue 2 are interrelated: while administrative procedures (Issue 2) may require higher-level sanction for payments above a threshold, they do not expand the officer's substantive adjudicatory power (Issue 1). Consequently, the remedial direction to effect payment (Issue 3) follows from the invalidity of the re-quantifying notice and the respondents' failure to act on the valid refund order.