2023 (8) TMI 987 - HC - VAT and Sales Tax

Refund claim - It is the case of the petitioner that bearing in mind the provisions of Section 38(3)(a)(ii) of the DVAT Act the refund application was liable to be granted within two months from the submission of the revised return and thus latest by 31 May 2015 - HELD THAT - Once the objections had been duly lodged online the mere fact that the respondents were unable to trace out the objections filed physically would not detract from the right of the petitioners to claim refund - it is further constrained to observe that the various status reports as well as the averments made in this respect relate to the objections which had been filed for FY 2014-15 those pertaining to FY 2015-2016 and the first quarter of FY 20172018. However the claim for refund which is made in the instant writ petition undisputedly relates to and emanates from the return which was submitted for the quarter ending 31 March 2014. Undisputedly all objections which pertained to FY 2012-13 as well as the period for April 2013 to December 2013 had been duly considered and ultimately disposed of by the respondents themselves in terms of the order of the OHA dated 31 October 2019. As would be evident from a bare perusal of Rule 34 a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself. This clearly emerges from Rule 34(1) which uses the expression except claimed in the return . The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself there is no additional obligation placed upon the assessee to file Form DVAT-21. This position in any case stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam 2023 (4) TMI 4 - DELHI HIGH COURT and Consortium of Sudhir Power Projects 2023 (2) TMI 290 - DELHI HIGH COURT . Once a claim for refund stands embodied in the return itself there is no additional obligation placed upon the assessee to file Form DVAT-21. This position in any case stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam and Consortium of Sudhir Power Projects. There thus existed no justification for the respondents adjusting the sum of Rs. 10, 74, 67, 218/- on 03 December 2018. This since evidently the objections were yet to be disposed of by the OHA on that date - the stand as taken by the respondents cannot be sustained and it is observed that they clearly acted in flagrant violation of the mandate of Section 38 of the DVAT Act. The impugned order dated 31 May 2022 is hereby quashed. The respondents are consequently directed to refund the amount of Rs. 6, 62, 74, 405/- along with interest from the date it fell due - Petition allowed.

Summary

Issues Involved:

1. Processing of Refund Application
2. Validity of the Impugned Order
3. Statutory Timeframe for Refund
4. Adjustment of Refund Against Tax Demands
5. Requirement to Submit Form DVAT-21
6. Pre-deposit as Tax or Duty
7. Online vs. Physical Filing of Objections

Summary:

1. Processing of Refund Application:
The petitioner sought a direction to process a refund application dated 24 August 2020 for Rs. 6,62,74,405/- under Section 38 of the DVAT Act, including interest under Section 42. Initially, the court directed the respondents to process the refund within two weeks. However, the respondents passed an order dated 31 May 2022, negating the refund claim, leading the petitioner to amend the writ petition to question this order's validity.

2. Validity of the Impugned Order:
The petitioner argued that the refund application dated 31 March 2015 was to be decided within the statutory timeframe of two months as per Section 38(3)(a)(ii) of the DVAT Act. The petitioner contended that any tax demand arising after this period could not nullify the refund claim. The court found that the respondents acted arbitrarily by making adjustments post 31 May 2015, thus illegally depriving the petitioner of the refund.

3. Statutory Timeframe for Refund:
The court emphasized the mandatory nature of the time limits under Section 38 of the DVAT Act for processing and issuing refunds. The refund claim, embedded in the return filed on 31 March 2015, was to be granted within two months, i.e., by 31 May 2015. The court reiterated that the respondents failed to act within this statutory timeframe.

4. Adjustment of Refund Against Tax Demands:
The court held that the respondents could not adjust the refund against tax demands that were not enforceable at the time the refund became due. Section 35(2) of the DVAT Act restrains the enforcement of tax demands under contestation before the Objection Hearing Authority (OHA). The court noted that adjustments made by the respondents were illegal as the objections were pending.

5. Requirement to Submit Form DVAT-21:
The court clarified that there was no legal obligation for the petitioner to submit Form DVAT-21 if the refund was claimed in the return itself. The court cited previous judgments to support this position, stating that the statute does not require a separate form for refunds claimed in the return.

6. Pre-deposit as Tax or Duty:
The court held that a pre-deposit made for pursuing an appeal does not constitute a tax or duty and cannot be utilized for adjustment purposes. The court cited the judgment in MRF Ltd., which established that pre-deposits are not payments of duty but are made to avail the right of appeal.

7. Online vs. Physical Filing of Objections:
The court found that the online submission of objections was sufficient compliance with the DVAT Act's requirements. The respondents' inability to trace physical objections did not detract from the petitioner's right to claim a refund. The court noted that the objections for FY 2012-13 and April 2013 to December 2013 had been disposed of, and there was no justification for retaining the refund amount.

Conclusion:
The court quashed the impugned order dated 31 May 2022 and directed the respondents to refund Rs. 6,62,74,405/- along with interest from the due date. The refund was to be effected within three weeks from the date of the decision.