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Shaila Enterprises Versus Commissioner of Value Added Tax

2016 (8) TMI 426 - DELHI HIGH COURT

Refund – input tax credit - adjustment of refund with outstanding demand - there was no outstanding demand that had been determined for the aforementioned period for which the refund was claimed - In terms of Section 38 (4) of the DVAT Act, it was open to the Commissioner, if he sought to make inquiries while processing the refund, to go in for an audit of the business affairs of the Petitioner under Section 58 of the DVAT Act or seek additional information under Section 59 of the DVAT Act. In t .....

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exchequer. A question then arises as to who should be made responsible for this and whether any action on the disciplinary side is not called for? Consequently, the Commissioner, VAT is directed to seek an explanation from the VATO who issued the above 'adjustment order' and to pass appropriate orders on the disciplinary side as he deems fit not later than four weeks from today. A copy of this order be delivered forthwith to the Commissioner, VAT by the Registry through a Special Messenger for .....

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Chand Khattar. Its registered office is at Jhandewalan, New Delhi. The Petitioner is registered as dealer under the Delhi Value Added Tax Act, 2004 ( DVAT Act ). The Petitioner states that it is engaged in the business of trading in cement. 2. The Petitioner filed its return for the period of month of January, 2008 on 28th February 2008, claiming refund of ₹ 1,02,08,179. In terms of Section 38(3) (a) (i) of the DVAT Act, with the return being filed on monthly basis, the date on which the .....

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in terms of Section 38(3) (a) (i) commenced from 27th March 2008. In terms of Section 42(1) DVAT Act, the interest on the refund due also started accruing from that date. According to the Petitioner, as of 31st May 2016 the interest worked out at 6% on the refund due worked out to ₹ 50,12,356. 4. The Petitioner states that it is a major supplier to Ready Concrete Mix plants. It is stated that many of these plants are located outside Delhi and therefore the sales of cement take place as in .....

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-16 on 28-2-2008 claiming a refund of ₹ 10208179 (Rs. One crores two lacs eight thousand one hundred seventy nine only) and the said application has been examined by the Department. However, the refund (Refund Allowed) of ₹ 0 (Rs. Zero Only) cannot be granted to you because of following reasons: The amount of refund claimed by you has been adjusted completely against the following outstanding demand The said amount of demand has not been paid by you till date, neither stayed by any a .....

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In short, the above order makes no sense. The most crucial parts of the so called adjustment order are completely missing. As it transpired, on that date i.e. 30th December 2010 there was no outstanding demand that had been determined for the aforementioned period for which the refund was claimed. Yet the VATO signed the order mechanically without application of mind. 8. What happened thereafter is interesting. One week after the so called adjustment order, on 5th, 6th and 7th January 2011, the .....

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5 53,142 IVth Qtr (2007-08) Rejection of refund amounting to ₹ 1,02,08,179/- 9. Aggrieved by the above notice of default assessment of tax, interest and penalty, the Petitioner filed objections under Section 74 of the DVAT Act before the Special Commissioner i.e., the Objection Hearing Authority ( OHA ). It is stated that the objection was also filed against the aforementioned adjustment order dated 30th December 2010 by which the Petitioner s refund claim was rejected in toto. 10. The OHA .....

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. It has been stated by the objector that the major supplies of the objector is to "Ready Concrete Mix" Plants at Gurgaon (Haryana) and nearby areas in view of ban of hot mix plants in Delhi. As such majority of sales of 'Cements' is interstate (Central Sale). The counsel averred that he has in possession necessary documents with regarding to the transporters, all the 'C 'forms and other documents which shall prove that interstate sale took place and the goods where act .....

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s, retail invoices, statutory forms, mode of payments, G.Rs, R.C of interstate punchers, copy of assessment orders if any etc., as per the laid down procedures contained in the various circulars on claim of refunds and as per the provisions of DVAT Act. 5. Ld AA shall provide sufficient opportunity to the objector for seeking any clarification/confrontation on any adverse material and a speaking order thereafter shall be passed afresh giving proper reasons for allowing /disallowing the refund as .....

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the AO on 15th July 2013 pursuant to the above order. 12. The Petitioner has filed a rejoinder affidavit asserting that the Petitioner did appear before the AO on 15th July 2013, and submitted the whole set of documents. 13. In the present proceedings under Article 226 of the Constitution of India, the Court does not consider it necessary to go into the disputed question whether in fact the Petitioner appeared before the AO on 15th July 2013. What the Court, however, proposes to do is to examine .....

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was made by Mr. Ramji Srinivasan, learned senior counsel appearing for the Respondent, to urge that the OHA had not actually set aside the order of the AO, which was the subject matter of the objection before the OHA, and that in the event of the Petitioner not appearing before the AA on 15th July 2013 the earlier order passed by the AO creating the demand for the aforementioned period in 2007-08 would somehow revive. 15. The Court is unable to accept the above submission. Para 5 of the order d .....

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ceedings before the OHA did not survive after the order of the OHA. The AO was required to pass an order afresh. It is for this reason that the Assessee was directed to appear before the AA on 15th July 2013. 16. The last line of the order of the OHA reads: The matter may be thereafter be decided in 30 days time . The word may was not to give an option to the AO whether or not to pass an order but the option if at all about the time period within which the order was to be passed. It is possible .....

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that, in terms of Section 34(2) of the DVAT Act, there is no power with the OHA to remand the matter to the AO. In the event of a remand ordered by the Court or Appellate Tribunal, the fresh decision on remand was required to be taken within one year. It was volunteered by learned counsel for the Petitioner that notwithstanding the above legal position, even if the Petitioner were to assume without admitting that such a power exists with an OHA then in any event the AO was required to pass an o .....

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o legal impediment any longer in granting refund to the Petitioner in respect of the claim made along with its return filed for the month of January 2008. The AO, obviously did not realise the implications of his failure to pass fresh assessment order in terms of the order dated 25th June 2013 of the OHA. 19. This Court has in a series of judgments emphasised the mandatory nature of the time limits under Section 38 of the DVAT Act for processing of the refunds. Reference in this regard may be ma .....

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e Court that any action the DT&T proposes to take in the form of reopening the assessment, the period within which the refund is to be issued will have to be taken into account. 20. For instance, in the present case, in respect of the assessment for the period 2007-2008, even if the DT&T wished to revisit them, the limitation under Section 34 of the DVAT Act would apply. There are two periods of limitation under Section 34 of the DVAT Act. One is the period of four years from the end of .....

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cannot therefore possibly seek to reopen the assessment for 2007-08. 21. The net result is that the refund for the month of January 2008, which the Petitioner has claimed refund along with the return became due to the Petitioner from the expiry of one month thereafter in terms of Section 38(3)(a) (i) of the DVAT Act. The interest thereon till the date of payment also falls due in terms of Section 42 of the DVAT Act. 22. The Court finds that along with the counter affidavit, the Respondent has n .....

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pay to the Petitioner the aforementioned refund amount with the interest thereon up to the date of payment on or before 5th September 206. The Court makes it clear that the amount through RTGS should be deposited in the Petitioner s account on or before that date. Any non-compliance of this direction will entitle the Petitioner to seek appropriate remedy in accordance with law. 24. Before parting with the matter, the Court would like to add that this is yet another instance of orders being pass .....

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