TMI Blog2016 (10) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of which stay has been granted by the appellate authority against the recovery. Such indirect recovery in the guise of withholding of refund cannot be permitted. Power under section 39(1) of the Act would not empower the authority to frustrate stay order granted by the competent authority or Court. There appears to be a clear non application of mind on part of the authority just to withheld the amount which is lawfully payable to the petitioner. One may notice that this amount which has been determined by the authority is by way of provisional refund amount and the same is determined to the extent of 90% of the original amount which was to be payable and therefore, while passing the order and sanctioning the amount of refund, sufficiently the interest of revenue has been protected and, therefore, we are of the opinion that since prima facie requirements to invoke the power to withhold the amount of refund are not available on record, such action is not possible to be confirmed and, therefore, the stand taken by the counsel for the Revenue is not possible to be accepted. The respondent authority directed to release the amount of refund which has already been sanctioned in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner was served with noticed dated 22.12.2005 from the office of respondent no.2 raising different objections to which exhaustive reply came to be given on 6.1.2016 explaining as to why the input tax credit has been accumulated. Along with the reply, necessary documents were also furnished by the petitioner no.2 company. 5. On 5.7.2016, respondent no.2 passed the impugned order wherein it is observed that a refund aggregating to 90% of ₹ 42,75,707/which comes to ₹ 38,48,000/is required to be granted and sanctioned to petitioner no.2. However, it had been further stated in the order that amount of refund being huge, same shall not be be given in cash but be adjusted against the recoverable amount from the petitioner. It is this order passed by respondent no.2 which the petitioner has challenged by way of present petition. 6. Referring to the impugned order passed by respondent no.2 authority, learned counsel Shri D.K. Trivedi for the petitioner contended that that action on part of the respondent authority is not only unjust and arbitrary, but also impermissible. It was contended that there is absolutely no provision contained in either Central Sales Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and ors. v. State of Gujarat and ors. decided on 8.3.2016 in Special Civil Application No.10966/2015 to contend that action on part of respondent authority cannot be stated to be justified and permissible. In the background of aforesaid facts, counsel submitted that the impugned order is beyond the scope of the authority and, therefore, same may be struck down. 7. Learned Assistant Government Pleader Shri Hardik Vora opposed the stand of the petitioner and contended that the authority is justified in withholding the amount of refund even if it is sanctioned and crystallized. He further contended that there is a possible demand of dues to a substantial extent to be met with by the petitioner no.2 and therefore, the authority is justified in withholding the amount of refund. Referring to the affidavit in reply filed by the authority and particularly, paragraph (6), wherein aforestated eventuality has been stated, he contended therefore, that action on part of the respondent authority is just, proper and permissible in law, therefore, the petition may not be entertained. Drawing our attention to relevant provisions, particularly, section 73(4) of the Act which deals with power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, it cannot be said that liability is crystallized finally upon which the authority can withhold the refund which has already been sanctioned by the authority itself. 10. An attempt is made by the counsel for the Revenue to justify the stand of the authorities that by virtue of statutory provisions, it is open for the authorities to withhold the refund and referring to the said statutory provisions, the authority has conveyed that to secure the possible liability which may accrue against the petitioners, it was necessary for the authority to withhold the amount of refund. The reason which is assigned in the impugned communication indicates that since the amount is huge, the department has chosen first to adjust the said amount towards the possible liability. But the record indicates that liability has yet not been finalised or crystallized in view of facts which are stated hereinabove. 11. To examine this stand taken by the counsel for the Revenue, if we peruse the relevant provisions, which is tried to be resorted to, more particularly, section 39 of the Gujarat Value Added Tax Act, 2003, it appears that conditions precedent which are supposed to be prevailing is missin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to above, are not satisfied, it would not be open for the authorities to invoke and resort to section 39 of the Act. Such powers are not possible to be exercised looking to the background of case on hand. Relevant extract of the said decision reads as under : 6. Thus, for the purpose of invoking section 39 of the Act, the condition precedents that are required to be satisfied are: firstly that there should be an order which gives rise to a refund; and secondly, that such order should be subject matter of (i) appeal, or (ii) further proceeding, or (iii) any other proceeding under the Act should be pending. It is only if both these conditions precedent are satisfied then resort can be made to the provisions of section 39 of the GVAT Act. Testing the facts of the present case in the light of the above statutory provision, the first condition precedent, viz., an order giving rise to a refund is satisfied, inasmuch as, the order of provisional refund does give rise to a refund. Insofar as the second condition precedent is concerned, the learned Assistant Government Pleader, even with the assistance of the concerned officer who was present before the court, was not in a position to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under the wrong premise that considering the circumstances stipulated in section 39 are established on record or not. Hence, there appears to be a clear non application of mind on part of the authority just to withheld the amount which is lawfully payable to the petitioner. One may notice that this amount which has been determined by the authority is by way of provisional refund amount and the same is determined to the extent of 90% of the original amount which was to be payable and therefore, while passing the order and sanctioning the amount of refund, sufficiently the interest of revenue has been protected and, therefore, we are of the opinion that since prima facie requirements to invoke the power to withhold the amount of refund are not available on record, such action is not possible to be confirmed and, therefore, the stand taken by the counsel for the Revenue is not possible to be accepted. 15. Learned counsel for the Revenue has further stated that under Rule 39 of the Gujarat Value Added Tax Rules,2006, it is open for authority to first adjust the amount of refund and then to be paid to the petitioner. However, this rule is always subject to substantive provision as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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