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2016 (7) TMI 858 - DELHI HIGH COURT

2016 (7) TMI 858 - DELHI HIGH COURT - [2016] 93 VST 101 (Del) - Delay in processing and issuing the refund - It is asserted that neither was the refund issued to the Petitioner within 15 days nor was the case picked up for audit nor any security under Section 38 (5) of the DVAT Act demanded. No notice was issued under Section 59 (2) of the DVAT Act within 10 days from the date of filing return. - Held that:- the failure by the Respondent to process the refund claimed by the Petitioners for all t .....

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rom today and in any event not later than September 10, 2016. If there is any failure by the Respondent to comply with the directions, the Petitioners shall seek appropriate relief in accordance with law. - Decided against the revenue. - W. P. (C) 7511/2015, W.P.(C) 8104/2015, W.P.(C) 8393/2015 - Dated:- 12-7-2016 - S. Muralidhar And Najmi Waziri, JJ. For the Petitioner : Mr. A.K. Babbar with Mr. Surinder Kumar, Mr. Bhagat Tripathi, Ms. Amita Babbar, Advocates For the Respondent : Mr. Naushad Ah .....

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AT ) to grant refund together with interest due to the Petitioners in accordance with Section 38 of the DVAT Act. In the case of NMC the refund together with interest was due for the months of November 2012 for the year 2012-13 and in the case of NIPL it was due for the 3rd and 4th quarter for 2012-13 as well as 1st, 2nd, 3rd and 4th quarters of 2013-14. 3. The case of the Petitioners is that they have been filing returns as and when due under the DVAT Act. For the month of November 2012, the re .....

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and 26th June 2013 respectively. 4. As regards the returns for 2013-14 the revised returns for the 1st and 2nd quarter were filed on 16th July 2014 claiming refund and for the 3rd and 4th quarter on 28th March 2015 (all revised returns) claiming refund. While the due date for issuance of refund for the 1st and 2nd quarter for 2013-14 was 16th September 2014, the refund for 3rd and 4th quarter for 2013-14 was due on 28th May 2015. 5. It is submitted that during the period in question, the dealer .....

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nd has been made till date. It is asserted that neither was the refund issued to the Petitioner within 15 days nor was the case picked up for audit nor any security under Section 38 (5) of the DVAT Act demanded. No notice was issued under Section 59 (2) of the DVAT Act within 10 days from the date of filing return. 6. The main plank of the submission of Mr. A.K. Babbar, learned counsel appearing for the Petitioner, is based on the decision of this Court in Swarn Darshan Impex (P) Limited v. Comm .....

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ent under Section 31 (1) (b) of the DVAT Act and if the Commissioner had failed to issue any assessment or order to that effect then the person aggrieved by such failure can file an objection before the Objection Hearing Authority ( OHA ) under Section 74 (2) of the DVAT Act. If the dealer is still aggrieved by the decision of the OHA, an appeal can be preferred before the Appellate Tribunal (AT) under Section 76 (1) of the DVAT Act. 8. As regards the preliminary objection raised by the Responde .....

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ore the OHA would only further delay the refund and therefore, is not considered to be efficacious. The preliminary objection is, accordingly, rejected. 9. It is submitted by the Respondent that a survey was undertaken by the Enforcement Branch in the business premises of the Petitioners on 17th October 2014 wherein not only some variation in cash and stock was found but also it was admitted by the dealer that it was engaged in making purchases from suspicious dealers thereby claiming false ITC .....

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t to issue the refund. 11. Interestingly the counter affidavit of the Respondent is silent on the failure by the Respondent to process the refund application within the time stipulated under Section 38 of the DVAT Act. It is also silent on the failure to comply with the Circular No. 6 issued by the Commissioner, VAT which is binding on the VATO. 12. It is pointed out by Mr. Babbar, learned counsel for the Petitioners that the counter-affidavit filed on 16th December 2015 adverting to the survey .....

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d for not one but two assessment years. Later while framing assessment for 3rd quarter of 2014-15 the AVATO covered assessment for more than one AY (2013-14 and 2014-15). This resulted in default assessment orders dated 31st March 2015 being issued by the AVATO for the 3rd quarter of 2014-15 under Sections 32 and 33 of the DVAT Act to which the objections were filed before the OHA. The OHA has referred to the fact that the survey team had in the course of the survey collected two cheques of S .....

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sessment was framed prior to the collection/deposit of tax and penalty sums above mentioned, hence not within the framework of law. Objector is eligible to seek refund of above stated advance tax and penalty paid as per the established provisions of law after satisfying the Ward Officer showing proof of payment of the same. 13. It is surprising that the Respondent has, while filing the counter- affidavit on 16th December 2015, concealed the above fact of OHA having found the survey undertaken to .....

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e assessment order and not to be clubbed in the assessments for the aforesaid 3rd quarter of 2014. The OHA has also observed that the Petitioner had submitted evidence regarding the functionality of the alleged cancelled dealer, M/s. Eagle Trade Mart, through ward records and replies obtained under the RTI. Consequently, the OHA had concluded that the claim of the surveying Enforcement Officers that M/s. Eagle Trade Mart was a cancelled dealer, appears to be totally wrong, deceptive, incorrect a .....

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rder of the OHA has attained finality. Consequently, the main ground urged in the counter-affidavit for not processing the refund application appears to be entirely without basis, both factually and legally. In any event the fact remains that the survey undertaken was not a justification for the Respondent to not process the refund applications under Section 38 of the DVAT Act. 15. Section 38 of the DVAT Act reads as under: "38. Refunds- (1) Subject to the other provisions of this section a .....

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) of this section shall be at the election of the dealer, either- (a) refunded to the person, - (i) within one month after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is one month; (ii) within two months after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is a quarter; or (b) carried forward to the next tax period as a tax credit in tha .....

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his Act within fifteen days from the date on which the return was furnished or claim for the refund was made. (6) The Commissioner shall grant refund within fifteen days from the date the dealer furnishes the security to his satisfaction under sub-section (5). (7) For calculating the period prescribed in clause (a) of subsection (3), the time taken to- (a) furnish the security under sub-section (5) to the satisfaction of the Commissioner; or (b) furnish the additional information sought u:nder s .....

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he dealer under clause (b) of subsection (3) of this Section unless the Commissioner is satisfied that the dealer has refunded the amount to the purchaser. (9) Where- (a) a registered dealer has sold goods to another registered dealer; and (b) The price charged for the goods expressly· includes an amount of tax payable under this Act, the amount may be refunded to the seller or may be applied by the seller under clause (b) of sub-section (3) of this section and the Commissioner may reasse .....

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thstanding anything contained to the contrary in subsection (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act." 16. It is seen that in the first place there are strict time limits laid down under Section 38 (3) read with Section 38 (7) of the DVAT Act. For taking any action under Section 38 (8) or 38 (9) or 38 (11) the dealer would have a notice in the first place by the Commissioner. Such notice would have to be only issued in such .....

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for refund. All these options have to be exercised in such a manner that the time limit under Section 38 (3) is adhered to. Obviously, the proceeding under Section 38 cannot result in reopening of concluded assessment. The statutory rejection for that course of action is entirely different. In other words, having missed the bus on the question of the reopening of a concluded assessment for whatever reason, the Commissioner cannot indirectly at the time of processing the application for refund se .....

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is assessed quarterly, the refund is to be made to the dealer within two months after the date on which the return is furnished or the claim for the refund is made. Of course, it is the dealer's option to elect as to whether the refund is to be made in cash or the said amount is to be carried forward to the next tax period as a tax credit in that period. In the present case, the petitioner has elected for the grant of refunds in cash and has not elected for carrying forward the refund amount .....

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under: 10. Such a situation does not arise in the present case inasmuch as the provisions of Section 38 do not contemplate a situation where the Commissioner does not grant a refund within the stipulated period. The decision in Behl Construction (supra) was in the context· of the provisions of Section 7 4 and those circumstances do not arise in the present case. As pointed out above, what this court has to determine is: what is the legislative intent behind the provisions of Section 38? .....

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of Section 38 which stipulates that for calculating the period prescribed in clause (a) of sub-section (3), the time taken to furnish the security under sub-section (5) to the satisfaction of the Commissioner or to furnish the additional information sought under Section 59 or to furnish returns under Sections 26 and 27, "shall be excluded". This provision as to exclusion of time taken in doing the aforesaid acts, is in itself an indication that the legislature was dead serious about t .....

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er sub-section (7) or Section 3 8, in a case falling under Section 38(3)(a)(ii), the refund has to be made within two months from the date of the return. 19. The Court in Swarn Darshan Impex (P) Limited v. Commissioner, Value Added Tax (supra) also rejected the argument that the issuance of notice to the dealer under Section 59 of the DVAT Act could delay the grant of refund. The Court observed as under: 13. In any event, even if we assume that the said notice was issued by the respondents and t .....

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