Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Yashwant Varma, Dharmesh Sharma, JJ.
Femc Pratibha Joint Venture - Appellant
Versus
Commissioner of Trade And Taxes - Respondent
W.P.(C) 2491 of 2023 & CM APPL. 9539 of 2023
Decided On : 21-09-2023
DVAT Act - Refund of Excess Tax Credit - Section 38, Section 39, Section 42 - The court quashed the adjustment order and directed the respondent to refund the amount claimed by the petitioner along with interest. The court also allowed the petitioner to challenge the default notices through statutory appeal.
Fact of the Case:
The petitioner, a Joint Venture Group engaged in work contracts for DMRC, sought refund of excess tax credit under the DVAT Act. The respondent issued adjustment orders and default notices, leading to the petitioner approaching the court seeking relief.
Finding of the Court:
The court held that the adjustment order fell foul of Section 38 of the DVAT Act and directed the respondent to refund the claimed amount with interest. The court allowed the petitioner to challenge the default notices through statutory appeal.
Issues: Refund of excess tax credit, validity of adjustment order, compliance with default notices, statutory appeal
Ratio Decidendi: The court emphasized the need for adherence to the time limit for processing and issuing of refunds as per Section 38 of the Act. It also clarified the conditions under which a refund can be withheld and the rights of the dealer in such cases.
Final Decision: The court quashed the adjustment order and directed the respondent to refund the claimed amount with interest. The petitioner was allowed to challenge the default notices through statutory appeal.
JUDGMENT
Dharmesh Sharma, J.
1. This writ petition under Article 226 and 227 of the Constitution of India filed by the petitioner is directed against the respondent thereby assailing the impugned adjustment order dated 18 November 2022 and default notices of tax & interest for certain years, to be detailed hereinafter, under the Delhi Value Added Tax Act, 2004[DVAT Act].
FACTUAL BACKGROUND
2. Briefly stated, the petitioner is a Joint Venture Group that had been engaged in the execution of work contracts for Delhi Metro Rail Corporation Ltd.[DMRC] and discharged its VAT liability under the DVAT Act as well as under the Central Act. For the purposes of executing various projects for DMRC, it had been making local purchases after bearing tax thereupon while on the other hand DMRC had also been deducting TDS on the gross turnover of the petitioner. The petitioner claimed refund of excess tax credit which arose due to Input Tax Credit[ITC] , the credit of which was brought forward for a sum of Rs. 17,10,15,285/- for the 4th quarter of 2015-16 and of Rs. 5,44,39148/- for the 1st quarter of 2017-18, along with the applicable interest as under Section 42 of the Delhi Value Added Tax Act of 2004. The original return for the above-mentioned quarter for 2015-2016 was filed on 12 May 2016, wherein a refund of Rs. 18,49,00,377/- was claimed. Subsequently, a revised return was filed on 31 March 2017 claiming refund of Rs. 17,10,15,285/-. In so far as the 1st quarter of FY 2017-2018 is concerned, the revised return claiming a refund of Rs. 5,44,39,148/- was filed on 29 March 2019 by the petitioner.
3. Shorn of unnecessary details, the petitioner asserts that the refund claimed for the assessment year 2015-2016 was pending for a long period of time and ultimately sent a letter dated 09 November 2022 requesting the respondent to consider its application for refund but instead it received the impugned adjustment order vide letter reference No. 66240 dated 18 November 2022. On the petitioner sending a letter dated 07 December 2022 to the Assistant Value Added Tax Officer[AVATO], objecting to the passing of the impugned order dated 18 November 2022 for the same being in violation of Section 38 (2) of the Act, it was made aware of the default notices of tax & interest dated 30 March 2020 for the 2nd, 3rd and 4th quarter 2015- 2016; dated 23 March 2021 for the 1st and 4thquarter 2016-2017 under the Central Sales Tax Act 1956[CST] ; dated 30 March 2021 towards Annual Assessment for the year 2016 and lastly 26 March 2022 towards the 1st quarter of 2017-2018.
4. The aforesaid narrative is to be understood in the background scenario to the effect that the default assessment for the 1st quarter of 2015-2016 was framed by the respondent on 03 September 2016, which was challenged before the Objection Hearing Authority[OHA] and eventually the objections for FY 2014-2015 as well as 1st quarter of 2015-16 were decided on 04 February 2019, whereby the demands were set aside and yet the refund was not released. In the meanwhile, vide letter dated 16 March 2018, the petitioner had made a request for release of the refund for 2015-16, pending objections suggesting that since the refund sought was Rs. 17,10,15,285/- as against the demand of Rs. 3,08,49,661/-, the balance amount of Rs. 14,01,65,624/- could be refunded along with interest.
5. On the respondent being unresponsive, the petitioner preferred a Writ Petition bearing No. W.P. (C) 2105/2018, before this Hon'ble Court seeking the refund for 2014-15. The same was allowed on 22 May 2019, and consequently an order for refund of Rs. 32,11,62,907/- including interest was allowed, and thereafter, DVAT-22 was issued on 27 May 2019. However, being aggrieved of short payment of interest, the petitioner approached this Court again, resulting in this Court passing an order dated 30 July 2019 followed by another order dated 27 September 2019 awarding differential interest. The said orders were assailed before the Supreme C
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 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.
Refund of VAT – Department must adhere to timeline stipulated therein to fulfil object of provision which is to ensure that refunds are processed and issued in a timely manner.
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 ....
Settlement Act is self-contained code; post-payment under scheme, no outstanding dues exist for MVAT refund adjustment from prior period against settled subsequent period demand.
The central legal point established in the judgment is the obligation of the Respondents to decide the claim for refund in accordance with the law and the principle of 'unjust enrichment' expeditious....
The court emphasized that orders passed by administrative or quasi-judicial authorities are required to stand or fall on their own and subsequent explanations by way of affidavit(s) cannot be permitt....
The adjustment of tax refunds against outstanding demands cannot occur if no dues exist at the time of adjustment, protecting taxpayers from unlawful retention of funds.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
