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2023 (9) TMI 1429 - HC - VAT and Sales TaxAdjustment of Demand with the Refund while objections were pending - Refund the amounts claimed along with interest as per the return which was submitted by the petitioner for the first quarter of Financial Year 2016-2017 - deeming fiction as envisaged u/s 74(9) had come into play or not on the failure of the OHA to make the decision against the objections of 2010-11 within a period of 15 days form the service of notice in DVAT-41 - HELD THAT:- In the case of FLIPKART INDIA PRIVATE LIMITED VERSUS VALUE ADDED TAX OFFICER, WARD 300 & ORS. [2023 (8) TMI 987 - DELHI HIGH COURT] it was held that where a refund is claimed and stands embedded in the self-assessment form which is submitted, the respondents are liable to release the amount as claimed within two months from the date when the return is furnished in a situation where the assessee submits return on a quarterly basis. Undisputedly it is the provisions of Section 38(3)(a)(ii) of the Act which apply to the petitioner here. The ambit of Section 38(2) of the Act is explained and it is held that an adjustment against a refund claim could only be made in respect of a tax demand which is “due” and “enforceable”. On a conjoint reading of the said provision along with Section 35(2) of the Act, it is concluded that till such time as objections are pending before the OHA, the tax demand cannot be said to have “crystalised” so as to be adjusted against the refund as claimed. In the facts of the present case it is found that not only have adjustments been made contrary to the mandate of Section 38 of the Act, the demand as raised for FY 2010-2011 and which has been adjusted against the refund as claimed is additionally liable to be set aside on grounds resting on the provisions contained in Section 74 of the Act. The position which therefore emerges is that not only would the Hearing Notice of 24 May 2022 be rendered unsustainable in law, even the adjustments which have been made in the Refund Order of 29 April 2022 would be contrary to the provisions of the Act. It is concluded that since it is manifest that insofar as the demand for FY 2010-2011 is concerned, the objections would be deemed to have been accepted and granted by the Commissioner upon the expiry of 15 days when computed from 04 May 2022. The demand as created in terms of the assessment order as framed would thus clearly not survive - as a consequence of which the Commissioner would stand denuded of the jurisdiction to adjudicate upon those objections once the statutory fiction comes into effect. Section 74(9) in that sense not only accords a closure but commands to hold that the objections preferred by the assessee would be deemed to have been accepted. Turning then to the adjustments which have been made with respect to the demand for the first quarter of FY 2017-2018, the respondents do not dispute that the objections tendered by the petitioner before the OHA remain pending on its board. The demand for the first quarter of FY 2017-2018 is clearly rendered unenforceable and could not have been adjusted against the refund as claimed by the petitioner for the first quarter of FY 2016-2017. This aspect is clearly covered by the decision in Flipkart. The instant writ petitions is allowed and the Hearing Notice dated 24 May 2022 is quashed. The Refund Order of 29 April 2022 shall for reasons aforenoted stand set aside to the extent that it adjusts an amount of Rs. 13,60,14,547/-.
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