TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 987
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....med a direction calling upon the respondents to process the refund claim within a period of two weeks. However, and by the time the matter was taken up next, the respondents had proceeded to pass an order dated 31 May 2022 negating the claim for refund as raised by the petitioner. On the passing of the aforesaid order, the petitioner amended its writ petition questioning the validity of the aforenoted order in addition to the reliefs originally sought. 3. The claim for refund is principally based on the assertion of the petitioner that its application of 31 March 2015 was liable to be decided within the statutory timeframe as prescribed in Section 38(3)(a)(ii) of the DVAT Act. It had asserted that in the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge the same and ensure that the refund was granted within two months. The petitioner also questions the validity of the impugned order dated 31 May 2022 and submits that any claim for refund which had fructified in accordance with the timelines prescribed by Section 38(3)(a)(ii) of the DVAT Act could not have been nullified by any d....
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....nt demands were also assailed by the petitioner by filing objections before the OHA on 15 July 2014. On 16 November 2015, the petitioner made a pre-deposit of Rs. 1,00,00,000/- in terms of the statutory mandate of Section 73(1) of the DVAT Act. The aforesaid pre-deposit was made in respect of the objections which had been preferred before the OHA pertaining to the default assessment notices for the Financial Year [F.Y.] 2012-2013 and April 2013 to December 2013. On 08 November 2016, the OHA proceeded to dispose of the aforesaid objections and remanded the matter to the file of the first respondent. 7. Between 23 August 2017 and 15 November 2017, reassessment proceedings for FY 2012-2013 are stated to have been undertaken resulting in a fresh and revised demand of Rs. 4,92,09,468/- inclusive of interest and penalty coming to be raised against the petitioner. These assessments were again challenged before the OHA with objections being filed on 16 October 2017 and additionally on 14 December 2017 and 15 December 2017. 8. Pursuant to the order of the OHA dated 08 November 2016, reassessment proceedings were also undertaken with respect to the period starting from April 2013 to March ....
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....espondents. There is a dispute between parties with respect to non-consideration of the aforesaid refund claim with allegations being leveled by both sides of a failure to comply with the formalities prescribed. Insofar as the petitioner is concerned, it asserts that there were various technical glitches besetting the portal of the respondents and on account of which Form DVAT-21 could not be lodged online. The petitioner also refers to certain documents forming part of the record in support of its allegation of technical glitches and shortcomings which the portal of the respondents faced. Since the claim for refund was not attended to, the instant writ petition came to be filed sometime in April 2022. 12. Mr. Gulati, learned senior counsel appearing for the petitioner, submitted that the return for the quarter ending 31 March 2014 which had been duly filed on 31 March 2015 had itself claimed a refund of Rs. 11,40,97,349/-. It was pointed out that between the filing of the return for the said quarter initially on 09 May 2014 and the revised return on 31 March 2015, only two notices for default assessment pertaining to the period April 2012 to March 2013 had come to be issued. It w....
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....distinction between a refund which may come into existence pursuant to an order made by the OHA or the appellate authority and one which is claimed in the return that is submitted by the assessee itself. In case of the latter, it was the submission of Mr. Gulati that the statute places no obligation upon the assessee to submit Form DVAT-21. 17. Taking the Court through the counter affidavits which had been filed in the present proceedings, Mr. Gulati also drew our attention to a chart showing the dates on which objections were filed for different default assessment notices on the online portal and additionally submitted physically before the respondents. The details as set out in that chart are extracted hereinbelow: - SR.NO. PERIOD ONLINE PHYSICAL FILING 1. Annual 2014-15 06.03.2019 P 40/pg. 345 08.03.2019 P41/Pg. 347 2. 1st Qtr 2015-16 24.12.2019 P42/Pg. 349 24.12.2019 P43/Pg. 357 3. 2nd Qtr 2015-16 4. 3rd Qtr 2015-16 5. 4th Qtr 2015-16 6. Annual 2015-16 22.04.2020 P44/Pg. 358 26.06.2020 P45/Pg. 360 7. 1st Qtr 2016-17 01.04.2021 P46/Pg. 378 05.04.2021 P47/Pg. 356 8. 2nd Qtr 2016-17 9. 3rd Qtr 2016-17 10. 4th Qtr 2016-17 11. 1st Qtr 2017-18 (wa....
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....ct; (3) even where the Department seeks to invoke Section 39 of the Act, that action again has to be taken within the time frame in Section 38(3) of the DVAT act. 10. The understanding of the Department regarding the calculation of the time limit under Section 38(3) of the Act being subject to Section 38(7), as was advanced before this Court, does not appear to be consistent with the legislative intent behind the enactment of Section 38 of the Act. It is a time-bound composite scheme which requires, in the first place, the DT&T to take immediate action upon receiving a return in which a refund is claimed. What Section 38(2) expects the Respondent to determine upon examining the claim of refund is whether there is any amount due from the dealer either under the DVAT Act or the CST Act. Such amount should already be found to be due. This is not an occasion, therefore, for the Department to start creating new demands either under the DVAT Act or the CST Act. In any event, even if the Department seeks to initiate the process for creating any fresh demand, that process cannot defeat the time period under Section 38(3)(a)(i) or (ii) for processing the refund claim." 20. Mr. Gulati....
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....'fail-safe' system devised by the Department for staggering the release of refund of payment once a refund application has been processed, verified and found to be in order." 21. It was then submitted that since the claim for refund stood raised and included in the return which was filed, there was no legal obligation placed upon the petitioner to separately move a Form DVAT-21. Mr. Gulati in support of the aforesaid submission relied upon the following passages from Commissioner of Trade and Taxes v. Corsan Corviam Construction S.A.-Sadbhav Engineering Ltd. JV 2023 SCC OnLine Del 1900:- "36. 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 taken out thereafter, i.e., issuance of notice under Section 59(2) of the 2004 Act on 11.09.2015 followed by a default assessment order d....
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....spute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same. The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long." 23. Seeking to buttress the challenge which was raised in the backdrop of Section 35(2) of the DVAT Act and the submission that once a demand comes to be challenged before the OHA, no adjustment can be made under Section 38(2), Mr. Gulati referred to the following observations as rendered in Bhupindra Auto International v. Commissioner, Trade & Taxes & Anr. Order dated 10.11.2016 passed in W.P.(C) 9521/2016. "The petitioner had claimed a direction for refund of excess VAT amounts for certain previous periods. This Court had issued notice and required the respondents to ensure that appropriate orders are made. It is submitted on behalf of the VAT Department and the Govt. of NCT of Delhi that the petitioner is entitled to refund in the first instance b....
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....y of special leave before the Supreme Court was disposed of on 28.11.2016. In this background, the Revenue's burden of the song as it were is that since the 21 form was only filed on 25.05.2018 (as without prejudice measure) by virtue of this Court's order dated 09.05.2018, the interest on the refund can be granted having regard to the express provisions of Section 30 of Delhi Sales Tax Act with reference to the date concerned, i.e. 25.05.2018. The Revenue's contention, in this Court's opinion, is untenable. The judgment in Suvidhe (supra) emphasized - although in the context of Section 11B (of the Central Excise Act) where the assessee had to approach and make a predeposit to the appellate authority-that such deposit sums would not amount to depositing or paying excise duty but rather to avail remedy of an appeal. The Bombay High Court observed as follows in Suvidhe Ltd. v. UOI 1996 (82) ELT 177 (Bom): 1. Rule. By consent rule is made returnable forthwith. Heard parties. 2. Show cause notice issued by the Superintendent (Tech.) Central Excise to the petitioner to show cause why the refund claim for Excise Duty and Redemption fine paid in a sum of Rs. 14,07,410/....
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....e for appropriation or disbursal by the Revenue Department. Paragraph-7 of the said judgment is also quoted below for ready reference:- "7. It cannot be denied that the demand against the petitioner was raised consequent to the order of adjudication. Section 35F of the Act under which the petitioner was required to deposit the amount of Rs. 50 lakhs speaks of 'deposit pending appeal.' It is clear that the amount so deposited remains a deposit pending appeal and is thereafter available for appropriation or disbursal consistently with the final order maintaining or setting aside the order of adjudication." 43. The learned Single Judge of the Kerala High Court in Alwaye Sugar Agency v. Commercial Tax Officer, Alwaye 2011 (42) VST 517 also dealt with a similar controversy as is involved in the present case and under the provision of 'Amnesty Scheme' announced in Kerala in the Budget Speech of 2010, the learned Single Judge directed that a sum of Rs. 75,000/- deposited by the petitioner-assessee under the said Scheme, cannot be adjusted against the interest portion under Section 55C of the Act, which is also akin to Section 42(6) in KVAT Act and the Court allowed the Writ Petition....
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.... pointed out that the principles laid down in MRF Ltd. were again reiterated in Rakesh Kumar Garg & Ors. v. The Deputy Commissioner of Central Excise, Division - I & Ors. Order dated 26.09.2018 passed in W.P.(C) 11757/2016 where the Court had held as under: - "3. The two-fold submissions have been made on behalf of the petitioners. Firstly, that the amounts paid as pre-deposit (before CESTAT) and pursuant to the directions of this court, while pursuing the appeals under Section 35G, did not bear the character of "tax" and consequently, when relief was finally granted, interest had to be paid from the date of deposit. The other submission is that if the amended Section 35FF (i.e. amended w.e.f. 06.08.2014) were to be treated as prospective, it would be arbitrary as it would deny the benefit of interest upon amounts which never bore the character of tax. 4. This court is of the opinion that the petitioners are entitled to relief in view of the consistent view taken in this regard by the courts. In Suvidhe Ltd. v. UOI, 1996 (82) ELT 177 (Bom), it was held that the amount paid as pre-deposit, for pursuing the appellate remedy or for any other reason mandated by law, cannot be treat....
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....m the rigors of the procedural formalities which are contemplated therein. We further note that as in the present case, claims for refund which may arise as a consequence of an order passed by the Appellate Authority or a Court would be governed by Section 30(4) of the Act. xxx xxx xxx 15. In our considered opinion a pre-deposit would become refundable the moment an Appellate Authority comes to hold in favour of the assessee and demands come to be annulled. This principally since pre-deposit is not tax or duty and the refund of which alone is regulated by Section 30(1) of the Act. We note that the decision of the Bombay High Court in Suvidhe Limited was assailed before the Supreme Court. While dismissing the appeal of the Union, the Supreme Court in Union of India Vs. Suvidhe Limited (2016) 11 SCC 808 held as follows:- "3. The show-cause notice issued by the Superintendent (Tech.), Central Excise to the petitioner to show cause why the refund claim for excise duty and redemption fine paid in a sum of Rs 14,07,410 should not be denied under Section 11-B of the Central Excise Act, 1944 is impugned in the present petition. The aforesaid amount is deposited by the petitioners not....
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....4) will have no application. This para reads as under: (Suvidhe Ltd. case [Suvidhe Ltd. v. Union of India, (1996) 82 ELT 177 (Bom)], ELT p. 178) "2. Show-cause notice issued by the Superintendent (Tech.) Central Excise to the petitioner to show cause why the refund claim for excise duty and redemption fine paid in a sum of Rs 14,07,410 should be denied under Section 11-B of the Central Excise Rules and Act, 1944 (sic) is impugned in the present petition. The aforesaid amount is deposited by the petitioners not towards excise duty but by way of deposit under Section 35-F for availing the remedy of an appeal. Appeal of the petitioners has been allowed by the Appellate Tribunal by its judgment and order passed on 30-11-1993 with consequential relief. The petitioners' prayer for refund of the amount deposited under Section 35-F has not received a favourable response. On the contrary the impugned show-cause notice is issued why the amount deposited should not be forfeited. In our judgment, the claim raised by the Department in the show-cause notice is thoroughly dishonest and baseless. In respect of a deposit made under Section 35-F, provisions of Section 11-B can never be applica....
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....justified in proceeding further in accordance with Section 38(2) of the DVAT Act. 29. It was further submitted that the allegation of a technical fault existing on the portal of the respondents is bereft of any material particulars and cannot be countenanced. Our attention was then drawn to the averments made in paragraph 22 of the counter affidavit and which had referred to discrepancies in the form which was submitted by the petitioner as well as its failure to update material particulars on the official portal. 30. We further note that pursuant to the liberty accorded by us on 28 July 2023, the respondents have tendered a further affidavit dated 04 August 2023 dealing with the various objections which are stated to have been filed before the OHA by the petitioner. The subsequent affidavit filed makes the following disclosures with respect to the objections filed for FY 2014-15 and leading up to the first quarter of FY 2017-18. From the averments made in paragraph 4 of the said affidavit, it would appear that the respondents take the position that the objections which stand placed as Annexure P-42, P-43, P-44 and P-45 of the writ petition had not been submitted. The said averme....
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....p; 11,40,97,349 VAT Orders FY 2012-13 April 77,13,911 60,83,423 77,13,911 2,15,11,245 77,13,911 15,00,000 77,13,911 1,14,375 May 8,17,925 6,39,662 8,17,925 22,75,512 8,17,925 8,17,925 June 3,31,263 2,56,479 3,31,263 9,19,005 3,31,263 3,31,263 July 4,95,735 3,87,488 4,95,735 13,78,958 4,95,735 4,95,735 August 11,55,290 8,88,782 11,55,290 31,99,362 11,55,290 11,55,290 September 7,83,037 5,92,748 7,83,037 21,58,822 7,83,037 7,83,037 October 8,34,261 6,22,953 8,34,261 22,91,475 8,34,261 8,34,261 November 10,86,916 7,98,213 10,86,916 29,72,045 10,86,916 10,86,916 December 6,98,954 5,04,466 6,98,654 19,01,774 6,98,654 6,98,654 January 5,08,972 3,61,022 5,08,972 13,78,966 5,08,972 5,08,972 February 4,42,248 3,08,786 4,42,248 11,93,282 4....
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.... 1,00,00,000 Total Refund Pending 6,62,74,405 33. We further note that the respondents while doubting the submission of objections in physical form do not question the online submission of objections filed by the petitioner. This is evident from not only the original affidavit that was filed in these proceedings but also from the disclosures made in the affidavit filed pursuant to our order of 28 July 2023. Even the Status Reports which stand appended to the subsequent affidavit do not doubt the submission of objections filed online. This we note, even though the original reports which had been filed by the respondents along with their counter affidavit only spoke of the objections either not being traceable or having not been received from the predecessor OHA. 34. In our considered opinion, once the objections had been duly lodged online, the mere fact that the respondents were unable to trace out the objections filed physically would not detract from the right of the petitioners to claim refund. We are further constrained to observe that the various status reports as well as the averments made in this respect relate....
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....der 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 forty-five days from the date on which the return was furnished or claim for the refund was made. (6) The Commissioner shall grant refund within 15 days from the date the dealer furnishes the security to his satisfaction under subsection (5). (7) For calculating the period prescribed in clause (a) of sub-section (3), the time taken to- (a) furnish the security under sub-section (5) to the satisfaction of the Commissioner; or (b) furnish the additional information sought under Section 59; or (c) furnish returns under Section 26 and Section 27; or (d) furnish the declaration or certificate forms as required under Central Sales Tax Act, 1956, shall be excluded. (8) Notwithstanding anything contained in this section, where- (a) a registered dealer has sold goods to an unregistered person; and (b) the price charged for the goods includes an amount of tax payable under this Act; (c) ....
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....ible, he shall determine the amount of the refund due and record an order in Form DVAT-22 sanctioning the refund and recording the calculation used in determining the amount of refund ordered (including adjustment of any other amount due as provided in subsection (2) of section 38). (6) Where a refund order is issued under sub-rule (5), the Commissioner shall, simultaneously, record and include in the order any amount of interest payable under sub-section (1) of section 42 for any period for which interest is payable. (7) The Commissioner shall forthwith serve on the person in the manner prescribed in rule 62, a cheque for the amount of tax, interest, penalty or other amount to be refunded along with the refund order in Form DVAT-22. (8) No refund shall be allowed to a person who has not filed return and has not paid any amount due under the Act or an order under section 39 is passed withholding the said refund. 57. Refund on account of objection.- The procedure for the refund of any amount due in consequence of an order made pursuant to an objection, or any other proceeding under the Act, shall be that provided in rule 34." 37. We are at the outset constrained to observe ....
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....onths after the date on which the return was furnished or the claim for refund was made. It is also not the case of the respondents that during the period between 31 March 2015 and 31 May 2015 any notices referable to Section 58 or 59 of the DVAT Act had come to be issued against the petitioner. 41. The respondents also cannot possibly seek to justify the retention of the refund claim on account of the default assessment notices which were issued on 15 May 2014 and 07 June 2014. This since the petitioner had duly filed objections before the OHA and in terms of Section 35(2) of the DVAT Act, and the demand as raised in terms thereof could not have been enforced. 42. We note that Section 38(2) of the DVAT Act uses the expression "recovery of any other amount due under this Act". The Commissioner in terms of Section 38(2) is thus entitled to apply any amount found to have been paid by an assessee in excess of the amount due from him before making a refund only if there exists an enforceable demand against that assessee. As is manifest on a conjoint reading of Section 35(2) and 38(2) of the DVAT Act, as long as objections remain pending with the OHA, any amount claimed by the respond....