TMI Blog2016 (7) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an order on merits, there was no justification in thereafter invoking the provisions of section 39(1) of the GVAT Act for withholding the refund which arose in the light of the order of the Tribunal. The impugned order dated 11.01.2016 passed under section 39(1) of the GVAT Act, therefore, cannot be sustained. - Special Civil Application No. 20489 of 2015 - - - Dated:- 22-4-2016 - Harsha Devani And G. R. Udhwani, JJ. For the Petitioners : MR DEVAN PARIKH, SR. ADVOCATE with MR. KUNAL NANAVATI, ADVOCATE FOR M/S NANAVATI ASSOCIATES, ADVOCATE For the Respondents : MR HARDIK VORA, ASSTT. GOVERNMENT PLEADER JUDGMENT ( Per : Honourable Ms. Justice Harsha Devani ) 1. Heard Mr. Devan Parikh, Senior Advocate, learned counsel with Mr. Kunal Nanavati, learned advocate for M/s Nanavati Associates, learned advocates for the petitioners and Ms. Maithili Mehta, learned Assistant Government Pleader for the respondents. 2. Having regard to the submissions advanced by the learned counsel for the respective parties, the court is of the view that the matter requires consideration. Hence, issue Rule. Ms. Maithili Mehta, learned Assistant Government Pleader, waives service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter dated 04.12.2008, M/s Arunoday Mills Ltd. replied that the entire property of the company was transferred to the petitioner company. Despite the aforesaid letter from M/s Arunoday Mills Ltd., no show cause notice was served upon the petitioner regarding the sales tax dues of M/s Arunoday Mills Ltd. and on 30.03.2010, the petitioner company was directly served with a demand notice for recovery of sales tax dues of M/s Arunoday Mills Ltd. amounting to ₹ 6,95,87,721/- along with interest and penalty within two days from the receipt of the communication. The petitioner company after making inquiries, found that certain orders of assessment and reassessment had been made against M/s Arunoday Mills Ltd. for the years 2003-04, 2004-05 and 2005-06 and that the appeals had been preferred by the assessee, viz., M/s Arunoday Mills Ltd. pursuant thereto, as well as the fact regarding cancellation of the certificate issued in favour of M/s Arunoday Mills Ltd. with effect from 01.04.2003. The petitioner thereafter preferred appeals being Second Appeals No.405, 406 and 407 of 2010 before the Gujarat Value Added Tax Tribunal, Ahmedabad (hereinafter referred to as the Tribunal ) against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2015, whereupon, the court issued notice returnable on 13.01.2016. The respondents No.1 and 2 came to be served on 23.12.2015 and the respondents No.3 and 4 came to be served on 31.12.2015. It appears that in the meanwhile, on 08.01.2016, notice came to be issued to the petitioner under section 39(1) of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the GVAT Act ), proposing to withhold the amount paid by the petitioner. Thereafter, on 11.01.2016, the Assistant Commissioner of Commercial Tax, passed an order under section 39(1) of the GVAT Act, withholding the refund payable to the petitioners pursuant to the order passed by the Tribunal. The petitioners, therefore, moved an amendment seeking to challenge the order dated 11.01.2016 passed by the Assistant Commissioner of Sales Tax, Morbi, withholding the refund due to the petitioners, which came to be granted. 8. Mr. Devan Parikh, Senior Advocate, learned counsel with Mr. Kunal Nanavati, learned advocate for the petitioners, vehemently assailed the impugned order by submitting that against the order passed by the Tribunal, the respondents had approached this court by way of tax appeals wherein applications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy before this court, it is not permissible for them to avail of the statutory remedy under section 39(1) of the GVAT Act to withhold the refund amount. 8.2 In conclusion it was urged that the impugned order passed by the fourth respondent under section 39(1) of the GVAT Act, deserves to be quashed and set aside, and the respondents are required to be directed to forthwith refund the amount deposited by the petitioners by virtue of the order passed by this court in Special Civil Application No.6639 of 2010. 9. Vehemently opposing the petition, Ms. Maithili Mehta, learned Assistant Government Pleader for the respondents submitted that the petitioners had deposited an amount of ₹ 4,00,00,000/- (rupees four crores) during the pendency of the proceedings before the Tribunal, which was to abide by the final outcome of the proceedings before the Tribunal. It was submitted that the amount paid by the petitioners being in the nature of payment towards tax, interest and penalty, it is permissible for the respondents, in exercise of powers under section 39(1) of the GVAT Act, to withhold the amount of refund if the Commissioner is of the opinion that the grant of such refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the amount now being deposited pursuant to that order, and the remaining amount due, is subject to the final outcome of the matters which were pending before the Tribunal. It was made clear that the order was passed only by way of interim arrangement and without going into the merits of the case. It was further observed that if the petitioners succeed in the matter, which are pending before the Tribunal, the Sales Tax Department shall grant the refund to the petitioners, in accordance with law. 11. From the above facts, it is evident that insofar as the payment of any amount for the purpose of hearing of the appeals as contemplated under section 73 of the GVAT Act is concerned, the Tribunal had already granted interim relief in favour of the petitioners by staying the recovery against them. However, since the petitioners wanted the attachment over the lands and the bank account to be lifted, this court had directed the petitioners to deposit further amount of ₹ 4,00,00,000/- (rupees four crores) with the respondent authorities for the purpose of lifting the attachment on the lands and the bank account. Evidently therefore, such amount had not been paid towards tax, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority may direct. 14. In the present case, a perusal of the record of the case reveals that the Tribunal has entertained the appeals preferred by the petitioners upon payment of a smaller sum and has granted stay against the recovery of the balance amount. Therefore, there was no question of recovery of the balance amount during the pendency of the appeals, nor was the petitioner obliged to pay any further amount till the final disposal of the appeals. However, this court in Special Civil Application No.6639 of 2010, while directing release of attachment over certain properties, by an order dated 24.09.2010, directed the petitioner to deposit a further sum of ₹ 4,00,00,000/- (rupees four crores) subject to the final disposal of the appeal, with a clarification that if the petitioner succeeds in the appeal, the respondents shall refund such amount to the petitioner in accordance with law. 15. In the above backdrop, the first question that arises for consideration is the character of the amount deposited by the petitioner pursuant to the order passed by this court, as to whether it can be said to be payment of tax or penalty as envisaged in the proviso to section 73 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier laws and shall then refund only the balance amount, if any; provided further that no adjustment under the provision shall be made towards a recovery of an amount due that has been stayed by an appellate authority. On a perusal of the provisions of section 36 of the GVAT Act as a whole, there is nothing therein to indicate that the same requires an application to be made prior to refund of any amount by a person. Moreover, what section 36 of the Act contemplates is refund of any amount of tax, penalty and interest paid by a person in excess of the amount due from him. In the facts of the present case, the amount paid by the respondent is by way of a pre-deposit pursuant to the above order passed by this court, which in terms of the said order, would enure till the final disposal of the appeals. Therefore, such amount cannot be termed as an amount of tax paid as envisaged under sub-section (1) of section 36 of the GVAT Act. 19. Section 37 of the GVAT Act makes provision for provisional refund and section 38 makes provision for interest on refund and are not relevant for the present purpose. Section 39 of the GVAT Act provides for power to withhold refund in certain ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner stands on a stronger footing, inasmuch as, in this case, the amount deposited is not even in the nature of pre-deposit but simply a deposit as a condition for lifting the attachment. Besides, the facts reveal that the petitioner has succeeded before the Tribunal. Therefore, as on date, there is an order of the Tribunal in favour of the petitioner. The petitioner has already paid the tax amount which is due and payable under the order passed by the Tribunal. Thus, as on date, no amount is outstanding payable by the petitioner. The appeal preferred by the State of Gujarat before this court is in respect of the amount of penalty and interest imposed by the assessing authority, which has been set aside by the Tribunal. 19. As noticed earlier, the respondents together with the appeals, had also filed stay applications on which this court has passed orders in the following terms: Considering the prayer made in this civil application, it appears that staying the impugned order passed by the learned Tribunal would tantamount to allowing the main tax appeal, which is admitted and pending for hearing. Hence, this Civil Application is dismissed. 20. Thus, the court, while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bona fide. 21. Apart from the above, the impugned order dated 11.01.2016 has been passed in exercise of powers under section 39(1) of the GVAT Act. Section 39 of the GVAT Act makes provision for power to withhold refund in certain cases. Sub-section (1) thereof provides that where an order giving rise to a refund is the subject matter of (i) appeal, or (ii) further proceeding, or (iii) where any other proceeding under the Act is pending, and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue, he may, after giving the dealer an opportunity of being heard, withhold the refund till such time as he may determine. Therefore, before passing an order under section 39(1) of the GVAT Act, the Commissioner has to record satisfaction that the grant of refund is likely to adversely affect the revenue. In the opinion of this court, when statute provides that the Commissioner has to form an opinion that grant of refund is likely to adversely affect the revenue, it means that the Commissioner has to record as to why he believed that the grant of refund is likely to adversely affect the revenue. Mere reference to the language of the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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