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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Commissioner of Trade And Taxes – Appellant
Versus
Corsan Corviam Construction S. A. -sadbhav – Respondent
VAT APPEAL 31 of 2022 & WP(C) 11505 of 2022
Decided On : 29-03-2023
Interest Claim - Delhi Value Added Tax Act, 2004 - Section 38(3)(a)(ii), Section 42 - The court ruled in favor of the assessee, holding that the claim for interest on a refunded amount accrued to the assessee on the date specified in Section 38(3)(a)(ii) of the 2004 Act. The court found that the provisions of Rule 34(4) of the 2005 Rules did not apply to the case, and the assessee was not required to file a fresh claim for refund in Form DVAT-21. The Tribunal's decision was upheld, and the assessee was entitled to interest at the rate of 6% per annum for the specified period.
Fact of the Case:
The case involved the assessee's claim for interest on a refunded amount under the Delhi Value Added Tax Act, 2004. The revenue claimed that interest would accrue to the assessee after the expiry of two months from the date when a claim is lodged in the prescribed form, DVAT-21. The assessee argued that the right to interest accrued on the date specified in Section 38(3)(a)(ii) of the 2004 Act, and the provisions of Rule 34(4) of the 2005 Rules did not apply to the case.
Finding of the Court:
The court found in favor of the assessee, holding that the claim for interest on the refunded amount accrued to the assessee on the date specified in Section 38(3)(a)(ii) of the 2004 Act. The court also ruled that the provisions of Rule 34(4) of the 2005 Rules did not apply to the case, and the assessee was not required to file a fresh claim for refund in Form DVAT-21. The Tribunal's decision was upheld, and the assessee was entitled to interest at the rate of 6% per annum for the specified period.
Issues: The issues revolved around the accrual of interest on a refunded amount under the Delhi Value Added Tax Act, 2004, and the applicability of Rule 34(4) of the 2005 Rules to the case.
Ratio Decidendi: The court held that the right to interest accrued to the assessee on the date specified in Section 38(3)(a)(ii) of the 2004 Act, and the provisions of Rule 34(4) of the 2005 Rules did not apply to the case. The Tribunal's decision was upheld, and the assessee was entitled to interest at the rate of 6% per annum for the specified period.
Final Decision: The court upheld the Tribunal's decision, ruling in favor of the assessee and entitling them to interest at the rate of 6% per annum for the specified period. The revenue was directed to pay the interest within four weeks of receipt of the judgment.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
TABLE OF CONTENTS
Preface:
Submissions of the Counsels:
Reasons and Analysis:1/2
Conclusion:
Rajiv Shakdher, J.
Preface:
1. The above-captioned statutory appeal is preferred by the revenue and is directed against the order dated 20.06.2022 passed by the Delhi Value Added Tax Appellate Tribunal, Delhi [hereafter referred to as "Tribunal"]. The Tribunal, via order dated 20.06.2022, ruled in favour of the respondent, i.e., Corsan Corviam Construction SA-Sadbhav Engineering Ltd. JV, [hereafter referred to as "the assessee"]. Thereafter, the assessee was impelled to file the above-captioned writ petition, as the order dated 20.06.2022 was 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-21.
5. The foregoing are the broad contours of the issue that arises for consideration.
6. However, for determining the issue at hand, the following facts are required to be noticed:
i) The assessee filed its revised return on 10.07.2015 for the fourth quarter of the Financial Year (FY) 2014-15 [hereafter referred to as the "relevant tax period"].
ii) Since the assessee's tax period arises every quarter, in terms of Section 38(3)(a)(ii), in the ordinary course, it would be entitled to the refund within two months after the date on which the return was furnished, which, as indicated above, was filed on 10.07.2015. Therefore, the two-month period would end on 10.09.2015.
iii) The assessee was refunded Rs.1,25,60,785/- for the relevant tax period on 14.08.2020, in Form DVAT-22.
(iv) The notified rate of interest, we were informed, is 6% (simple) per annum.
(v) The assessee was issued a notice under Section 59(2) of the 2004 Act, calling upon it to submit the relevant records on 11.09.2015, i.e., after the expiry of two months from the date of furnishing the return, as prescribed under Section 38(3)(a)(ii) of the 2004 Act.
vi) The assessee did not elect for having the amount claimed as a refund in the return to be carried forward to the next tax period as a tax credit; which was an option available under Section 38(3)(b) of the 2004 Act.
vii) The assessee, while filing its revised return on 10.07.2015, had claimed a larger amount as the refund, i.e., Rs.2,56,57,120/- in terms of Section 38 of the 2004 Act.
viii) A notice of default assessment of tax and interest [hereafter referred to as "notice of default assessment"] was issued for the relevant tax period under Section 32 of the 2004 Act on 02.08.2017, raising a demand amounting to Rs.1,25,60,785/-.
ix) It is in this context that the Commissioner of Trade and Taxes, via order dated 25.08.2017, granted the assessee a partial refund out of the amount claimed in the return, after adjusting the amount set forth in the notice of default assessment issued under Section 32 of the 2004 Act. Consequently, the assessee was issued a refund order r
The main legal point established in the judgment is that the right to interest on a refunded amount accrues to the assessee on the date specified in Section 38(3)(a)(ii) of the Delhi Value Added Tax ....
The main legal point established is that the refund under the DVAT Act should be processed within the stipulated period, and interest is payable from the date the refund was due to be paid.
State authorities are mandatorily required to pay interest on delayed tax refunds at the prescribed rate once the statutory limit for processing passes. Procedural failures in notification or record-....
The main legal point established in the judgment is that the words 'amount of refund' in Section 244A(1)(a) must be given their natural meaning, entitling the appellant to interest on the whole refun....
Taxpayers are entitled to interest on refunds under Section 244A of the Income Tax Act, and this does not constitute 'interest on interest'.
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