The main legal point established is that default assessment orders made to defeat refund claims, without justification and in abuse of statutory powers, cannot be sustained under the DVAT Act.

Prateek Jalan, J.

The challenge in this writ petition is to default assessment orders dated 14.11.2018 and consequent refund adjustment order dated 15.11.2018 passed by the authorities under the Delhi Value Added Tax Act, 2004, ("hereinafter referred to as the DVAT Act").

2. The petitioner is engaged in trading of shoe accessories and is registered under the DVAT Act. In accordance with the provisions of the statute, the petitioner pays tax on purchases made within the state ("input tax") which is adjusted against the tax payable on sales ("output tax"). The petitioner claims refunds on account of the fact that its output tax liability is less than the input tax paid. To the extent that the petitioner's sales are inter-state sales, it is entitled to a concessional rate of tax of 2% against C forms.

3. For the quarter 01.01.2014 to 31.03.2014, the petitioner filed a return claiming a refund of Rs.17,59,874/-. The failure of the respondents to issue the refund led to the filing of W.P(C) 8762/2018 before this Court. However, after notice was issued in that petition on 21.08.2018, default assessment orders dated 14.11.2018 were passed in respect of five quarters, resulting in a demand of Rs.17,66,883/-. These pertain to the fourth quarter of F.Y. 2012-13 and all the quarters of F.Y. 2013-14.

4. Mr. Puneet Rai, learned counsel for the petitioner, submitted that the refund was required to be made within a period of two months from the date of filing of the returns under Section 38(3)(ii) of the DVAT Act. He submitted that the assessment in the present case (for F.Y. 2013-14) had already been made on 12.01.2017 and statutory forms had also been filed. The default assessment orders, according to him, do not reveal any mismatch between the selling dealer and the petitioner, or any finding that the petitioner has concealed material particulars which could justify the invocation of the extended period under Section 34 of the DVAT Act.

5. Mr. Anuj Aggarwal, learned Additional Standing Counsel for the Government of NCT of Delhi, submits that the default assessment orders dated 14.11.2018 are based upon a mismatch in the account of dealers from whom the petitioner had made purchases. Mr. Aggarwal submitted that this justifies the suo motu review of the assessment order in the present case.

6. Section 38 of the DVAT Act provides 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 1 [sub-section (4) and sub-section (5)] of this section, any amount remaining after the application referred to in sub-section (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 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 1 [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 2 [within fifteen days from the date on which the return was furnis