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2016 (8) TMI 176 - DELHI HIGH COURT

2016 (8) TMI 176 - DELHI HIGH COURT - [2016] 94 VST 358 (Del) - Validity of default assessments of tax and interest - Refund - Input tax credit - carry forward of excess credit - After the amendment to Section 11(2) of the DVAT Act with effect from 12th September 2013, the credit earned for the fourth quarter of 201314 could not be carried forward to the next tax period. - Held that:- The notices of default assessments of tax and interest and penalty bristle with numerous illegalities. First, as .....

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hereinabove. - Secondly, with the AVATO himself acknowledging that the authority in DVAT-50 was not available, there was no question of him proceeding further in the matter and issuing notices of default assessments of tax, interest and penalty in the manner that he has done. - Thirdly, in an obvious violation of the principles of natural justice, with the AVATO by not informing the Petitioner of the adjourned date of hearing when he failed to attend office on 5th July 2016, which was t .....

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e order dated 3rd June 2016 passed by this Court. The Court, therefore, has no hesitation in setting aside the notices of default assessment of tax and interest and penalty dated 12th July 2016 issued by the AVATO - Further refund shall be allowed with interest. - Decided in favor of assessee and against the revenue. - W.P.(C) 6746/2016 & CM Nos. 27712 and 27713/2016, W.P.(C) 6747/2016 & CM Nos. 27714 and 27715/2016 7 W.P.(C) 5584/2016 - Dated:- 3-8-2016 - S. MURALIDHAR & NAJMI WAZIRI JJ .....

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nt violation of the statutory provisions of the Delhi Value Added Tax Act, 2004 ( DVAT Act ) and the decisions of the Courts. 3. The background facts are that the Petitioner is engaged in the sale and purchase of mobile phones of brands like Samsung, Apple, HTC etc. The Petitioner, a registered dealer under the DVAT Act, states that it has been paying taxes at the time of purchase of the phones and claims the tax paid as input tax credit in terms of Section 9(1) of the DVAT Act. 4. It is stated .....

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fund of ₹ 68,83,331/- was claimed, which on a revised return filed by the Petitioner got reduced to ₹ 53,81,316/-. 5. The Petitioner states that it was pursuing its refund claim. On 27th May 2016 a survey operation was undertaken by the officials of the DT&T in the premises of the Petitioner which, according to the Petitioner, was in contravention of Sections 59 and 60 of the DVAT Act. Meanwhile, on account of the failure of the DT&T to issue the refund, due to the Petitioner .....

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cted to be listed on 19th July, 2016. The Court did not assemble on that date and the petition was adjourned for today. 7. The above order became necessary as there was an obvious failure by the Respondent to grant refund due to the Petitioner for the fourth quarter of 2013-14 together with interest due thereon in terms of Section 38 of the DVAT Act. The Court has, in numerous judgments delivered on the issue, emphasized that while it is open to the DT&T to take appropriate action to recover .....

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475 (Del), Lotus Impex v. Commissioner DT&T (2016) 89 VST 450 (Del), Dish TV India Ltd. v. GNCTD (2016) 92 VST 83 (Del) and Nucleus Marketing & Communication v. Commissioner of DVAT [decision dated 12th July 2016 in W.P.(C) 7511/2015]. The principles summarized in the said decision reads as under: "9. ...(1) the mandatory nature of the time limits under Section 38 of the Act for the processing and issuing of refunds have to be scrupulously adhered to by the Department; (2) where th .....

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vs. Commissioner of VAT (supra), this Court noted as under: 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 a .....

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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 and disciplinary proceedings initiated where there is a clear breach of the statutory duties. The collective failure of such officers is imposing a huge interest burden on the exchequer which is clearly avoidable. 9. Reverting to the case on hand, it appe .....

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oner to attend the office of the AVATO on 16th June 2016 at 11 am. On 14th June 2016 another set of notices were issued under Section 59(2) of the DVAT Act for the same period as the notices dated 8th June 2016, directing the Petitioner to attend the office of the AVATO on 22nd June, 2016 at 11 am. 10. In the meanwhile, the Petitioner had requested the Enforcement Branch of the DT&T to hand over to it the documents, papers book etc. which were taken from its premises during the survey. Anoth .....

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aring, the Petitioner requested the AVATO to show the Petitioner the order issued in form DVAT-50, which authorized the AVATO to initiate the proceedings under Section 59(2) of the DVAT Act. 12. It may be noted at this stage that under Section 68(2) of the DVAT Act where the Commissioner delegates his powers under Chapter X the delegate shall carry and produce on demand evidence in the prescribed form of the delegation of these powers when exercising the powers . Therefore, there had to be a DVA .....

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uld have been a sufficient reason for the AVATO not to have further proceeded in the matter as he should have been aware of the legal requirement spelt out in Section 68 (2) of the DVAT Act. Unfortunately, it appears that the AVATO persisted with the matter. 14. On 2nd July, 2016 the AVATO recorded the following order: Sh. Virag Tiwari, Counsel of M/s Teleworld Mobiles Pvt. Ltd. was (sic) appeared on 01.7.20 16 in Assessment case for the year 2012-13 to 2016-17 (till 27.5.2016). He has requested .....

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, if the dealer want to say anything more, last opportunity is allowed to submit the same by 05.7.2016, before keeping the case for orders. Accordingly notice issued. 15. What transpired next is not in dispute. The Petitioner did go to the office of the AVATO on 5th July 2016 with two written replies in its possession. The AVATO was on leave on 5th July 2016. Therefore, no hearing could take place on that date. What transpired thereafter is, to say the least, inexplicable. The AVATO decided to t .....

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s the notices of default assessment of tax and interest for each of the four quarters of 2013-14 and March 2013 under Section 32 of the DVAT Act creating demands in excess of the refund due. On the same day, the AVATO also passed a notice of default assessment of penalty under Section 33 of the DVAT Act for the fourth quarter of 2013-14. The default notices of assessment of tax, interest and penalty issued by the AVATO on 12th July 2016 for the four quarters of 2013-14 have been challenged in WP .....

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penalties imposed, no refund is due to the Petitioner. 18. The notices of default assessments of tax and interest and penalty bristle with numerous illegalities. First, as already noticed instead of processing refunds within the time granted under Section 38 of the DVAT Act, the AVATO compounded the problem by seeking to re-open the assessments for the earlier years including the period for which the refund was claimed using the order passed by this Court recording the assurance of the learned .....

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ciples of natural justice, with the AVATO by not informing the Petitioner of the adjourned date of hearing when he failed to attend office on 5th July 2016, which was the date fixed. took up the matters in his chamber on 9th July 2016 which, being a second Saturday, was a holiday and then reserved the matter for orders on 12th July 2016. The notices of default assessment of tax and interest and penalty are undoubtedly in violation of the principles of natural justice and patently illegal. 21. Th .....

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ere. The Court is concerned about the conduct of the several officials of the DT&T, who seem to be acting not only in contravention of the various provisions of the DVAT Act, but also in wilful disobedience of the law explained by this Court in several of its decisions. Although, circulars and orders may have been issued by the Commissioner VAT from time to time, they appear to have no impact on the behaviour of the officials of the DT&T. On a daily basis, this Court has been faced with .....

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