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2023 (8) TMI 987
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....as in the aforesaid light that the Court framed 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 D....
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....aised against the petitioner. These default assessment 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 ....
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....s stated to have submitted Form DVAT-21 on the portal of the respondents. 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....
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....the return itself. Mr. Gulati submitted that the statute itself draws a 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....
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.... more information from the dealer after picking up the return in which the refund has been claimed for scrutiny, those steps are to be taken within the time frame envisaged under Section 38 of the DVAT Act; (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 ev....
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....ithin the Department for the lapses on part of those processing refund application resulting in such unnecessary payment of interest beyond what is permissible. This is an additional reason why the Court refuses to countenance the socalled '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 ....
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....ine Del 700 where the Division Bench held as follows:- "17. On a closer examination of the facts of this case, we are unable to accept that the petitioner can be denied interest on the amount of refund which has been unjustifiably withheld, mainly for two reasons. First, that there is no dispute 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....
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....est would be permissible only in accordance with that provision, i.e. Section 30(4) in the event the 90 days elapse. In this case, the judgment of the Court was delivered on 14.05.2015 and the petitioner approached the Sales Tax Department on 22.07.2015 and 20.11.2015. The Delhi Sales Tax authority's appeal by way 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 follo....
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....and other enactments. It relied upon the logic in Suvidhe (supra) and Nestle (supra) and stated as follows: "42. To the same effect, the Division Bench of the Delhi High Court in Voltas Limited v. Union of India [1999 (112) ELT 34 (Delhi)], also held that the pre-deposit under Section 35F of the Act is a deposit pending appeal and it is not available 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....
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....nterest became calculable is incomprehensive and illogical. For these reasons the petitioner is entitled to interest calculable from the date when its appeal was allowed by this Court by order dated 14.05.2015. The respondents shall ensure that the amounts are processed and credited to the petitioner's account within four weeks. The petition is allowed in these terms." 25. It was further 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 b....
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....-deposit cannot partake the character of a tax or duty. This since, it would clearly be connected only with the right of the assessee to pursue an appeal. xxx xxx xxx 13. As is manifest from a clear reading of sub-section (1), the said provision relates to a claim made by a person for refund of an amount of tax paid by him. The express language as employed in Section 30(1) itself takes the case of refund of pre-deposit out from 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 Un....
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....A-159 (SC)] dismissing the special leave petition which was filed by the Union of India against the judgment of the High Court of Bombay in Suvidhe Ltd. v. Union of India [Suvidhe Ltd. v. Union of India, (1996) 82 ELT 177 (Bom)]. Since the special leave petition was dismissed in limine, we would like to reproduce para 2 of the judgment of the High Court wherein the High Court had observed that in case of such deposits, provisions of Section 11-B of the Customs Act (sic Central Excise Act, 1944) 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 jud....
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....efund application dated 24 August 2020. 28. It was further submitted by Mr. Satyakam that at the time the aforesaid application came to be made, certain other demands had come to be raised against the petitioner and consequently the respondents were clearly justified in adjusting the refunds claimed against those demands. It was his submission that the refunds which were claimed by the petitioner were adjusted against tax demands of Rs. 23,50,50,928/- which existed as on 06 May 2022 and thus the respondents were clearly 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 Augus....
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.... to the amounts which the petitioner claims is refundable:- Demand raised in Remand proceedings as per OHA's orders dt. 08.11.2016 Demand as per OHA's Order dated 31.10.2019 Demand on allowance of rectification applications Particulars Assessed Interest Penalty Total Demand Tax Interest Tax Interest Total Refund Refund claimed in Return dated 31.03.2015 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 3,8....
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....sp; VAT Orders FY 2014-15 Ist Qtr. 3,17,968 2,05,155 - 5,23,123 2nd Qtr. 5,37,830 3,26,977 - 8,64,507 3rd Qtr. 4,23,658 2,41,311 - 6,64,969 4th Qtr. 32,45,566 17,28,598 - 49,74,164 70,26,763 70,26,763 (70,26,763) Refund due 6,29,04,536 Subtract: Refund sanctioned as per order dt. 03.12.2018 66,30,131 Net Refund Pending 5,62,74,405 &nbs....
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....DVAT Act reads as follows:- "38. Refunds (1) Subject to the other provisions of this section and the rules, the Commissioner shall refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. (2) Before making any refund, the Commissioner shall first apply such excess towards the recovery of any other amount due under this Act, or under the CST Act, 1956 (74 of 1956). (3) Subject to sub-section (4) and sub-section (5) of this section, any amount remaining after the application referred to in subsection (2) of this section shall be at the election of the dealer, either- (a) refunded to the person,- (i) within one month after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is one month; (ii) within two months after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is a quarter; or (b) carried forward to the next tax period as a tax credit in that period. (4) Where the Commissioner has issu....
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....nd the price charged for the goods is expressed not to include an amount of tax payable under this Act the amount may be refunded to the seller or may be applied by the seller under clause (b) of sub-section (3) of this section without the seller being required to refund an amount to the purchaser. [(11)] Notwithstanding anything contained to the contrary in subsection (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act." 36. The subject of refund is also dealt with by Rules 34 and 57 of the DVAT Rules 2005, which are extracted hereinbelow: "34. Refund of excess payment.- (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 shall issue notice to any person claiming refund t....
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....ects. 38. The failure of the respondents to refund the amount of pre-deposit and even adjusting the sum of Rs. 1,00,00,000/- deposited in that respect on 16 November 2015 is also clearly arbitrary and untenable. Our Court has consistently taken the position that a pre-deposit does not partake the character of a tax or duty. Those are sums which are deposited by an assessee solely for the purposes of pursuing its remedy of appeal. The consistent line as struck in this respect was duly recognized by the Court in its recent decision in Otis Elevators. We are thus of the firm opinion that the respondents were neither entitled in law to retain the pre-deposit amount of Rs. 1,00,00,000/- nor could it have been utilized for adjustment purposes. 39. The record would bear out that the objections which had been filed before the OHA for FY 2012-2013 and April 2013 to December 2013 had all been disposed of on 08 November 2016 itself. There thus appears to be no justification or valid ground for the said amount having been unjustifiably retained by the respondents. That then takes us to the principal question of whether the refund as claimed in the revised return of 31 March 2015 could ha....
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....nd so created under assessment or otherwise get stayed by virtue of Section 35(2) of DVAT Act, 2004, and demand gets locked up till the disposal of the objections. In order to safeguard the interest of revenue and dealers, the Commissioner (VAT) has advised that the objection Hearing Authority should adhere to the time limit of 03 months as provided in Section 74(7) of DVAT Act, 2004. This issues with prior approval of the Commissioner, Value Added Tax. (G.C. Lohani) VATO (Policy) No.F.6(87)/Policy/VAT/2011/440-445 Dated: 10.08.2011 Copy to:- 1. PS to the Commissioner, Value Added Tax, Department of Trade and Taxes. Vyapar Bhawan, I.P. Estate, New Delhi. 2. All Special/Addl./Joint Commissioners, Department of Trade and Taxes, Vyapar Bhawan, I.P. Estate, New Delhi. 3. Dy. Director (Policy) Department of Trade and Taxes. 4. Manager (EDP), Department of Trade and Taxes, with the request to upload the circular on the website of the department. 5. President, Sales Tax Bar Association (Regd.), Vyapar Bhawan, I.P. Estate, New Delhi. 6. Guard File. (G.C. Lohani) VATO (Policy....