TaxTMI 
TaxTMI 
2010 (11) TMI 874
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....h Value Added Tax Act, 2005 (the VAT Act) and rule 37 of the Andhra Pradesh Value Added Tax Rules, 2005 (the VAT Rules), claiming refund of about Rs. 3.53 crores. The first respondent conducted enquiry and while accepting the claim restricted the same to about Rs. 3 crores. On further enquiry by the Deputy Commissioner, the refund was again restricted to about Rs. 2.87 crores. The petitioner then made an application for refund of the said amount to the second respondent, namely, the Joint Commissioner. On its being forwarded, the Joint Commissioner (CT), Audit II disallowed the refund. Being aggrieved by the said order dated April 6, 2008, the petitioner preferred an appeal before the Sales Tax Appellate Tribunal. The same being T.A. No. 428 of 2008 was allowed on June 1, 2009. Thereafter the petitioner made an application dated July 24, 2009 to the first respondent. The same was forwarded to the second respondent who, by communication dated September 14, 2009, instructed the first respondent to withhold the refund till the disposal of tax revision case. An endorsement dated February 16, 2010 was made/issued by the first respondent aggrieved by which the present writ petition is fi....
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.... from the date of receipt of the claim. In either case, it is for the VAT dealer to satisfy the authority prescribed by producing the accounts and records in substantiation of the claim. If the prescribed authority fails to make refund, in either of these situations, the amount of refund shall carry simple interest at 12 per cent per annum. Yet another category of situations provided in section 39 of the VAT Act is if the decision of the assessing authority is reversed by the appellate authority under section 31, or the appellate authority under section 33, or the Appellate Tribunal under section 33, or the High Court under section 35, and the dealer can claim refund which shall be made within a period of 90 days as otherwise it would carry interest at 12 per cent per annum for the period of delay. "Authority prescribed" is not defined in the VAT Act. As per section 2(24) of the VAT Act, "prescribed" means prescribed by the Rules made under the VAT Act. Rule 59 of the VAT Rules specifies the authorities for the purpose of exercising powers, namely, registration of VAT/TOT dealers, receipt of tax returns, assessment/reassessment, search and seizure, imposing penalties, passing order....
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.... is likely to adversely affect the Revenue". The order to withhold shall be made with prior approval of the Deputy Commissioner till such time he may determine. In the case on hand, indisputably the first respondent on the advice of the second respondent passed the impugned endorsement under section 40(2) of the VAT Act. Therefore, it is necessary to consider the issue as to whether section 40(2) of the VAT Act is intended to take away the right conferred under sections 38 and 39 of the VAT Act. Is it possible to argue that any refund would adversely affect the Revenue during the pendency of appeal or further proceeding? If the intention of the Legislature was to bar refund under sections 38 and 39 of the VAT Act, the discretion vested in the prescribed authority to withhold refund would not have found place in the statute. The right to seek refund and the right to claim interest, in the event refund is not made within the prescribed period of 90 days, would indicate that mere pendency of an appeal or further proceeding is no ground to withhold refund. If the appeal of VAT/TOT dealer goes against the Revenue, they can still withhold the refund on the premise that there is likelihoo....
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....any other proceedings under the Act is pending, is to ensure legislative vitality to grant of power to withhold the refund. Article 265 of the Constitution enjoins that no tax shall be levied or collected except by authority of law. The taxing legislation, whether the Act of 1956 or the Act of 1957 together with the schedules thereunder and other executive instructions relating to exemptions or clarifications constitute the cornucopia of legislative authority for the levy and collection of tax, within the meaning of article 265. Where a quasijudicial or judicial authority determines in appeal or further or other proceedings the liability of an assessee or licensee such determination constitutes the liability to tax of an assessee or licensee within the raft of legislative authority. The assessee or licensee cannot be subjected to a tax liability beyond such determination. Therefore any levy or collection or even the withholding of any excess amount (of or towards a tax) levied or collected from an assessee or licensee, beyond what has been determined in the appeal or further proceedings, would fall foul of article 265. Refund of the excess amount levied and collected is in the circ....
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.... be complied with. It is also pertinent to note that in the event of the State succeeding in the aforestated TRC, the petitioner will have to make payment of tax along with interest thereon and, therefore, in that event, the State is not to suffer at all, whereas, at present, when the petitioner has already succeeded before the STAT and if the amount payable to the petitioner is withheld, the petitioner would be adversely affected." The above two precedents conclusively show that on a mere subjective opinion that the refund would affect the Revenue adversely, it cannot be withheld. The Government as a litigant to the case before the Appellate Tribunal cannot be permitted to withhold the refund only on the ground that they intend to file a tax revision case. Section 40(2) of the VAT Act requires prior approval to withhold the refund by the Deputy Commissioner. When the statute prescribes the authority and also prescribes other authorities for refund/adjustment of the VAT/TOT, notwithstanding the fact that the approving authority is a higher official, the legislative choice of conferring power on the Deputy Commissioner cannot be ignored. Even if the Joint Commissioner, by virtue o....