The main legal point established is the mandatory nature of Section 74(8) and (9) of the DVAT Act, the consequences of non-compliance, and the erroneous invocation of Section 9(2)(g) of the DVAT Act.

JUDGMENT :

Dr. S. Muralidhar, J.

1. The Petitioner has approached this Court for a declaration that the objections filed by the Petitioner before the Objection Hearing Authority (OHA) against the assessments for the period 2009-10 (annual) should be deemed to be allowed. One consequential prayer is for setting aside the default notices of assessment of tax, interest and penalty all dated 19th May, 2011. The other consequential prayer is for a direction of the Respondents to refund to the Petitioner Rs.1,34,35,473/- (total) for the periods from May to December 2010, January to March 2011, March 2012, July 2012 and November, 2012 together with the interest in terms of Section 42 of the Delhi Value Added Tax Act, 2004 (DVAT Act).

Background facts

2. The background facts are that the Petitioner is a dealer registered under the DVAT Act, functioning under the jurisdiction of the Value Added Tax Officer (VATO), Ward No.41. The Petitioner filed the prescribed monthly returns for the periods for each of the months from May to December 2010, January to March 2011, March 2012, July 2012 and November, 2012.

3. On 19th May 2011, notices of default assessment of tax, interest and penalty under Sections 32 and 33 of the DVAT Act were issued by the VATO (Audit). According to the Petitioner, the said assessments were issued by the VATO (Audit) without having jurisdiction and authority in DVAT-50 as per Section 68 of the DVAT Act read with Rule 65 of the DVAT Rules.

4. The first of these orders is for the period ending 30th April, 2009. The relevant portion of the said order reads as under:

“During the course of audit the records/books of the firm were test checked and it has been revealed that during this period the dealer has claimed the ITC to the tune of Rs.37,72,963/- on the strength of the Tax Invoices issued by such dealers ,in whose cases, on the scrutiny of the DVAT system in the department, it was found that all of these dealers showed transactions worth crores in the matter of a very short period of time and have paid very little or nil tax to the deptt. The details of these dealers along with their GTO and tax paid are as follows:

S. No.

Name of the firm & TIN

Dt. of Regn. GTO (2009-10)

VAT deposited

Amount of VAT

shown in the tax invoices issued to the instant dealer

Remarks

(details of 5 entities not set out here)

Total

37,72,964/-

Hence, the amount of ITC claim of Rs.37,72,964/-is recovered along with interest@ 15%.”

5. As pointed out by learned counsel for the Petitioner, although, there is no express reference in the above order to Section 9 (2) (g) of the DVAT Act, by denying the Petitioner the ITC claims on the ground that there was a doubt about the dealers with whom such transactions had been entered into and that they had paid “very little or nil tax to the department,” it is obvious that what the VATO (Audit) was doing was to invoke Section 9(2)(g) of the DVAT Act to deny the above ITC claim to the Petitioner.

6. Aggrieved by the above assessments, the Petitioner filed objections under Section 74 of the DVAT Act before the OHA on 22nd July, 2011. The Petitioner has enclosed with the petition, a copy of the acknowledgment receipt stated to be issued to it on 22nd July 2011 as Annexure P-5.

7. On 23rd May 2011, another notice of default assessment of tax, interest and penalty under the CST Act, 1956 was issued by the VATO for the periods July, 2009 to March, 2010. Against this order also, the Petitioner filed objections before the Special OHA.

8. On 16th October 2012, refunds for the periods May, 2010 to March, 2011 were adjusted by the adjustment orders passed by the VATO. Aggrieved by the assessment as well as the adjustment orders, the Petitioner filed objections before the OHA under Section 74 of the DVAT Act. By an order dated 22nd March, 2013, the OHA upheld the orders of the Assessing Authority.

9. The Petitioner then filed an appeal before the Appellate Tribunal VAT, which by its order dated 1st April, 2015 allowed the appeal and set a