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2016 (8) TMI 26 - DELHI HIGH COURT

2016 (8) TMI 26 - DELHI HIGH COURT - TMI - Refund - delay in issuance of refund - The grievance of the Petitioner is that despite the lapse of over two months since the filing of the quarterly returns, the refunds were not issued in terms of Section 38(3)(a)(ii) of the DVAT Act. The Petitioner also points out that Circular No. 6 dated 15th June 2005 issued by the Commissioner, VAT requires refund claims to be processed and refund orders issued in Form DVAT-22 within a period of 15 days from the .....

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so that the process is streamlined and his instructions regarding speedy disposal of refunds is strictly followed. He must initiate disciplinary action against those officers of the DT&T who are found disobeying the instructions issued by the Commissioner from time to time in this regard. The Commissioner should undertake a periodic review, at least once in two weeks, as to how many refund applications have been processed and within what time. Responsibility should be fixed on derelict officers .....

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, W.P.(C) 6023/2016 & CM No. 24786/2016, W.P.(C) 5944/ - Dated:- 28-7-2016 - S.MURALIDHAR & NAJMI WAZIRI JJ. Petitioner Through: Mr. Vasdev Lalwani with Mr. Mohit Gautam and Mr. Rohit Gautam, Advocates Respondent Through: Mr. Satyakam, Advocate, Additional Standing Counsel, Govt. of NCT of Delhi with Ms. Jyoti Seth, VATO Ward 68. W.P.(C) 6013/2016 & CM No. 24776/2016 W.P.(C) 6014/2016 & CM No. 24777/2016, W.P.(C) 6015/2016 & CM No. 24778/2016 W.P.(C) 6020/2016 & CM No. 24783/ .....

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s reflected in the following tabular chart: Case No. Refund Period Date of filing return and refund amount WP(C) 5944/2016 01.01.2014 to 31.03.2014 7th October, 2014 ₹ 1,84,728/- WP(C) 6013/2016 01.01.2015 to 31.03.2015 23rd April, 2015 ₹ 2,47,928/- WP(C) 6014/2016 01.01.2012 to 31.03.2012 28th April, 2012 Rs. 34,406/- WP(C) 6015/2016 01.04.2011 to 30.06.2011 27th July, 2011 ₹ 1,03,714/- WP(C) 6020/2016 01.07.2012 to 30.09.2012 31st December, 2013 Rs. 92,600/- WP(C) 6022/2016 0 .....

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the Commissioner, VAT requires refund claims to be processed and refund orders issued in Form DVAT-22 within a period of 15 days from the date of receipt of the return unless it has been picked up audit or where additional information sought that has not been furnished. 3. It is further pointed out by the Petitioner that as recently as on 20th July 2016, for the period 1st April 2012 to 31st March 2013, the Department of Trade ad Taxes (DT&T) has issued a notice to the Petitioner under Secti .....

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n those periods. The submission of Mr Satyakam is that the said orders were uploaded on the website in the account of the Petitioner dealer soon after they were passed. Both orders refer to notice dated 10th September, 2011 having been issued to the Petitioner under Section 59(2) of the DVAT Act requiring the Petitioner to produce certain documents. It is submitted that on the failure of the Petitioner to submit those documents, the aforementioned notices of default assessments for the above sai .....

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ent has been passed for the aforementioned two periods i.e. for the fourth quarter of AY 2010-11 and first quarter of AY 2011-12, the question of now issuing any refund to the Petitioner for those periods did not arise. It was open to the Petitioner to seek appropriate remedies against those orders in accordance with law. 6. Mr. Vasdev Lalwani, learned counsel for the Petitioner submits in reply that the above interpretation of Section 38(3) read with Section 38 (7)(d) of the DVAT is erroneous. .....

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er is entitled to issue a notice, in terms of Section 38(4), under Section 58 of the Act, regarding audit, investigation and inquiry or seek additional information under Section 59 of the Act. He could also require the Assessee to furnish security under Section 38(5) of the Act. It is only when such adjustment is contemplated that the question of time limit under Section 38(3)(a) of the Act being subject to Section 38(7) of the Act would arise. He submits that in no instance can the consideratio .....

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ssioner or an officer authorized to proceed under Section 59 of the DVAT Act or to create demand for any of the periods for which the refund is granted in accordance with the provisions of the DVAT Act remands unaffected. 7. In the first place a reference is required to be made to Section 38 of the DVAT Act which reads thus: 38. Refunds (1) Subject to the other provisions of this section and the rules, the Commissioner shall refund to a person the amount of tax, penalty and interest, if any, pai .....

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e 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 that period. (4) Where the Commissioner has issued a notice to the person under section 58 of this Act advising him that an audi .....

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missioner 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 sub- section (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 under section 59; or (c) furnish returns under section 26 and section 27; or (d) furnish the declaration or certificate forms .....

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e (b) of sub-section (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 reassess the buyer to deny the am .....

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ed 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. 8. There have been numerous judgements rendered by this Court emphasizing the mandatory nature of the time limit set out under Section 38 of the DVAT Act. Instead of burdening this judgement again with the extracts of those decisions, the Court would only like to set out the list of such decisions as under: (i) Swarn Darshan Impex (P) Limited v. Commission .....

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ulously adhered to by the Department; (2) where the Department seeks to invoke Section 59 of the DVAT Act to seek more information from the dealer after picking up the return in which the refund has been claimed for scrutiny, those steps are to be taken within the time frame envisaged under Section 38 of the DVAT Act; (3) even where the Department seeks to invoke Section 39 of the Act, that action again has to be taken within the time frame in Section 38(3) of the DVAT act. 10. The understanding .....

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g the claim of refund is whether there is any amount due from the dealer either under the DVAT Act or the CST Act. Such amount should already be found to be due. This is not an occasion, therefore, for the Department to start creating new demands either under the DVAT Act or the CST Act. In any event, even if the Department seeks to initiate the process for creating any fresh demand, that process cannot defeat the time period under Section 38(3)(a)(i) or (ii) for processing the refund claim. 11. .....

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ory nature of the instructions. There is therefore no question of the DT&T, and in particular the VATO concerned, not responding immediately to the refund claim made. Where it is felt that more information should be called for then the notice under Section 59(2) DVAT Act has to necessarily be issued within fifteen days thereafter. 12. In the instant case, the return for the fourth quarter of 2010-11 was filed on 28th April, 2011. Yet, the notice under Section 59 (2) of the DVAT Act was issue .....

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consequent notices of default assessments. The files produced by Mr Satyakam contain copies thereof but no proof of the said notices having been uploaded on the website in the Petitioner's account soon after they were issued. 13. In any event, the above notices having been issued beyond the time limits set by the Commissioner VAT for processing of refund claims, there is no valid explanation offered by the DT&T for not processing the refund claims for the said two periods within the time .....

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explanation for the failure by the DT&T to process and issue to the Petitioner the refunds for the fourth quarter of 2010-11 and first quarter of 2011-12 within the time frame set out under Section 38 of the DVAT Act. 15. On the question of the Petitioner not uploading the requisite Form 9 under the CST Act till 9th February 2015, learned counsel for the Petitioner is right in his contention that Section 38 (7) has to be read with Section 38 (3) of the DVAT Act and not in isolation. Section .....

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to be adjusted. In the present case, there was nothing found due from the Petitioner whether under the DVAT Act or the CST Act at the time the Petitioner's return for the said periods claiming refund were picked up for scrutiny. Had the DT&T responded promptly as was envisaged, then the Petitioner could have been asked to furnish the information or particulars as envisaged under section 38 (7). If there was a failure by the Petitioner thereafter to provide the information or documents t .....

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turn filed for the second quarter of 2012-13, a notice under Section 59(2) was issued on 25th July, 2016. Clearly, therefore it is way beyond the two months period envisaged under Section 38(3)(a)(ii) within which refund had to be processed and issued. 17. Mr. Satyakam urged the Court to grant the Respondent sufficient time so that entire exercise pursuant to the notices issued under Section 59 of the DVAT could be completed. The Court is not, in these petitions, concerned with the outcome of th .....

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ounts are mounting. 18. The Court is constrained to observe that there have been a large number of petitions filed in this Court by dealers awaiting the processing of their refund claims. Despite numerous judgments of this Court and circulars issued by the Commissioner VAT, including Circular No. 6 of 2005 and recently the Order dated 21st July 2016, the problem of delayed refunds persists. The frequent transfers of VATOs and the lack of any orientation and training as regards their statutory re .....

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