TaxTMI 
TaxTMI 
2023 (4) TMI 4
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....not being implemented by the revenue. 2. The two actions, thus, centre around the issue concerning the assessee's claim for interest on an amount which stands already refunded. The assessee claims interest for the period commencing from the date when two months elapsed [which in turn would commence from the date when the return was filed], and running till the date when the refund was paid. This relief is sought by the assessee in terms of the provisions of Section 38(3)(a)(ii) read with Section 42 of the Delhi Value Added Tax Act, 2004 [hereafter referred to as the "2004 Act"]. 3. The rate at which interest could possibly be granted, even as per the assessee, would be simple interest at the rate notified by the Government; to be computed in accordance with the provisions of Section 42 of the 2004 Act. 4. The revenue, on the other hand, claims that since the refund arose in favour of the assessee, pursuant to the order dated 26.08.2019 passed by the Objection Hearing Authority, [in short, "OHA"], the interest would run from the date when a claim for refund is made. The claim for refund, according to the revenue, is required to be made in the prescribed form, i.e., DVAT....
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.... via a writ action, i.e., W.P. (C) 12876/2018. This Court disposed of the writ petition on 22.07.2019, and while doing so, held that the assessee was entitled to interest for the period spanning between 11.09.2015 and 14.09.2017, in terms of Section 42 of the 2004 Act, read with Rules 34 and 36 of the Delhi Value Added Tax Rules, 2005 [hereafter referred to as the "2005 Rules"]. xi) The Court via the very same order had fixed an end date by which interest was required to be paid, albeit with a caveat that if it was not paid by the given date, compensatory cost amounting to Rs. 50,000/- would also have to be forked out. The end date fixed was 16.08.2019. (xii) Notably, on the partial refund amounting to Rs. 1,30,96,335/- remitted to the assessee, the revenue in consonance with the aforementioned order of the High Court, paid Rs. 15,82,874/- as interest to the assessee. (xii)(a) This aspect of the record has been brought to the fore to highlight the fact that insofar as the partial refund was concerned, the Court applied the statutory principle outlined in Section 42 of the 2004 Act and Rules 34 and 36 of the 2005 Rules. 7. The remaining refund i.e., Rs.....
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....er Rule 34(4) of the 2005 Rules. (viii) Being aggrieved, the assessee preferred an appeal with the Tribunal. The Tribunal, via the impugned order dated 20.06.2022, allowed the appeal and held that the assessee was entitled to interest commencing from 11.09.2015 till the date of receipt of the refund amount, i.e., 14.08.2020. 8. It is in this context, as noticed at the very beginning of the narration, that two cross-actions have been lodged in this Court. The revenue has preferred the above-captioned appeal against the Tribunal's order dated 20.06.2022, while the assessee's writ action, which is a mirror image of the revenue's appeal, seeks implementation of the Tribunal's order dated 20.06.2022. 9. It is against this backdrop that the following questions of law were framed in the revenue's appeal by a Coordinate Bench of this Court. "I. Whether the Ld. Tribunal in the impugned order failed to comply with the statutory intent and purport of Section 38 of the DVAT Act read with sub-rule (4) to Rule 34 of the DVAT Rules, 2005? II. In case a refund arises in favour of the Assessee pursuant to an Order passed by the OHA/Special Commis....
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....reiterated the submissions made before the Tribunal. It was emphasized that the assessee had claimed the refund in the revised return filed on 10.07.2015. While a part of the refund was allowed on 25.08.2017, the remaining amount was withheld due to a notice of default assessment issued on 02.08.2017. 12.1 The fact that the notice of default assessment was untenable in law came to the fore with the OHA passing the order dated 26.08.2019, which was given effect on 06.12.2019 by the assessing authority. This, however, did not efface the fact that the assessee had claimed interest in its return on the entire amount, i.e., Rs.2,56,57,120/-. Because no notice either under Section 58 or Section 59 had been issued, the assessee was entitled to the refund after the expiry of two months, commencing from the date when the revised return was filed. Two months from that date came to an end on 10.07.2015 and therefore, the notice issued on 11.09.2015 could have had no legal impact on the trigger date stipulated for the grant of refund in Section 38(3)(a)(ii) of the 2004 Act. 12.2 In support of this plea, reliance was placed on the following Judgements: (i) Swarn Darshan Impex (P)....
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....iling form DVAT-21. Importantly, neither the notice of default assessment dated 2.08.2017 issued under Section 32 of the 2004 Act, nor the OHA's order dated 26.08.2019, advert to the issue concerning interest. The OHA's order confined itself to the demand of tax, which was pegged at Rs.1,25,60,785/-. Therefore, for the revenue to contend that the refund arose out of the OHA's order dated 26.08.2019 is misconceived. 12.9 Resultantly, Rule 34(4) of the 2005 Rules would have no application. The assessee was not obliged to lodge its claim for refund in Form DVAT-21. The contents of Form DVAT-21 clearly suggest that the said form is not required to be filed in those cases where the refund is embedded in the assessee's return. [See Commissioner of Income Tax, Bombay v. Scindia Steam Navigation Co. Ltd, (1962) 1 SCR 788, T.D. Kumar and Brothers (P) Ltd. v. Commissioner of Income Tax, Calcutta, (1967) 63 ITR 67 and Commercial Taxes Officer, Special Circle I, Jaipur v. Badri Narain Sita Ram and Another, 1979 SCC OnLine Raj 238]. 12.10 Even in cases where proceedings are pending and refund is withheld in the exercise of powers conferred under Section 39 of the 2004 Act,....
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....arried forward to the next tax period as a tax credit in that period. (4) Where the Commissioner has issued a notice to the person under section 58 of this Act advising him that an audit, investigation or inquiry into his business affairs will be undertaken or sought additional information under section 59 of this Act, the amount shall be carried forward to the next tax period as a tax credit in that period (5) The Commissioner may, as a condition of the payment of a refund, demand security from the person pursuant to the powers conferred in section 25 of this Act within fifteen days from the date on which the return was furnished or claim for the refund was made. (6) The Commissioner shall grant refund within fifteen days from the date the dealer furnishes the security to his satisfaction under sub-section (5)." 14.1 Clearly, a plain reading of the said provision would show that subject to other provisions of the very same Section and the Rules, the Commissioner is obliged to refund the tax, penalty and interest, if any, paid by an assessee, which is more than the amount due from it. Furthermore, before ordering a refund, the Commissioner is empowered....
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....le (1) and (4) of the said Rule. For the sake of convenience, the said provisions are set forth hereafter. "34 Refund of excess (1) A claim for refund of tax, penalty or interest paid in excess of the amount due under the Act (except claimed in the return) shall be made in Form DVAT-21, stating fully and in detail the grounds upon which the claim is being made. (2) Only such claim shall be made in Form DVAT-21 that has not already been claimed in any previous return. A claim for refund made in Form DVAT-21 shall not be again included in the return for any tax period. (3) The Commissioner may, for reasons to be recorded in writing, issue notice to any person claiming refund to furnish security under sub-section (5) of section 38 in Form DVAT 21A, of an amount not exceeding the amount of refund claimed, specifying therein the reasons for prescribing the security. (4) Where the refund is arising out of a judgement of a Court or an order of an authority under the Act, the person claiming the refund shall attach with Form DVAT-21 a certified copy of such judgement or order. (5) When the Commissioner is satisfied that a refund is admi....
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....adly, Section 40A deals with a situation where two or more persons or dealers arrive at an arrangement which the Commissioner is satisfied has been entered into to defeat the application or the purpose or any provision of the 2004 Act. In such a situation, the Commissioner can not only declare the arrangement null and void as regards the application and purpose of the 2004 Act, but is also empowered to provide for an increase or decrease in the amount of tax payable by any person or dealer who is affected by the arrangement, whether or not such dealer or person is a party to the arrangement, albeit in such a manner as is considered appropriate, to counteract any tax advantage obtained by the dealer from or under the arrangement. 18. Therefore, what emerges is that, while the OHA ruled on the legal tenability of the order dated 02.08.2017, concerning objections filed under Section 74 of the 2004 Act, it could not have stymied the accrual of interest which was based on a claim lodged by the assessee via its revised return. The assessee's right to refund accrued on completion of the timeframe given in Section 38(3)(a)(ii) of the 2004 Act, i.e., on 10.09.2015. The proceedings ta....
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....our view, came to a correct conclusion. The facts obtaining in the instant matter make the order passed by the Tribunal in M/s Gupta Traders case completely distinguishable. 21. Before we conclude, we may also refer to the judgement of the Supreme Court in Union of India v. VKC Footsteps India Pvt. Ltd., 2021 SCC OnLine SC 706, cited on behalf of the revenue in support of the submission that refund is not a constitutional right, but a statutory right. We cannot quibble with this proposition. 21.1 VKC Footsteps India case dealt with the issue whether refund based on inverted duty structure can be granted on input services as well. It is in this context the Court ruled that the refund on account of inverted duty structure was available only against input tax levied on goods, and not services. The Court, in this context, examined Section 54(3) of the Central Goods and Services Tax Act, 2017 and the Rules made thereunder, more particularly, in the backdrop of Rule 89(5). In our view, this judgement does not shore up the case of the revenue. 22. Likewise, the decision rendered by the Supreme Court in E.D. Sassoon & Company Ltd. v. The Commissioner of Income Tax, Bombay City, (1....