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TMI Blog2017 (1) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... RUVCO CARTON INDUSTRIES, VIVEK ENTERPRISES, UNITED SURGICAL INDUSTRIES, ALLIED ELECTRICALS, NAKODA PRINT & ARTS, RMCO AUTO ACCESSORIES, M/S N.G. ENGINEERING COMPANY, M/S RAJ KAMAL FAIR LUBE CO. , SUNSARA PAPERS, HIMANKPACKAGING CORPORATION, YASHITA PRINT-O -PACK PVT. LTD., RAM PERSHAD BISHAN SARUP, S .A. B. SAI ENTERPRISES, SISKA SHOES AND ASSESSORIES, JAI AMBEY FUMITURES, JAI MAA FURNITURE, M/S N.G. ENGINEERING COMPANY, VANSH ELECTROMECHANICAL DEVICES (P) LTD., FELDER BROADBAND SYSTEMS, HARE KRISHNA TRADING COMPANY, SAHNI HARDWARE, CHANCHAL LITES, KUNDALIA POLYMERS PRIVATE LIMITED, SHIVA HARDWARE STORE, MEHNGA RAM GIAN CHAND, CLASSIC POLYMERS, DINESH SANITARY STORE, SHIV SHAKTIMETALS PVT. LTD., RAINBOW INDUSTRIES INDIA, BHAVYA TRADING CORP, ROYAL PRINTERS, K.C. ART GLASS, BASANT LAL ART, BASANT LAL INTERNATIONAL, ASIAN BEARING CO., VAISHANAVI METALS, COSMIC XPERTS, KUNJ BIHARI ENTERPRISES, NIRWAN INDUSTRIES, M/S SKT ENTERPRISES, M/S RRK TRADING. CORPORATION, BAJAJ INTERNATIONAL, MAYANK PLASTIC, SUNRISE OVERSEAS, SWASTIK POLYMERS, S.S. PACKAGING INDUSTRIES, M/S. INDIAN OVERSEAS COMMERCIAL CO., NITIN INTERNATIONAL INC., SINKWELL DRILLCO PVT. LTD., GANDHI STORE INDIA, KUNDAN ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11698/2016, 11699/2016, C.M. APPL.46082/2016, 11701/2016, C.M. APPL.46084/2016, 9928/2016, C.M. APPL.39477/2016, 10079/2016, C.M. APPL.39951/2016, 10125/2016, 11840/2016, C.M. APPL.46782/2016, 11841/2016, C.M. APPL.46668/2016, 11854/2016, C.M. APPL.46809/2016, 11855/2016, C.M. APPL.46810/2016, 11857/2016, C.M. APPL.46814/2016, 11862/2016, 11837/2016, C.M. APPL.46666/2016, 11839/2016, C.M. APPL.46667/2016 Through: Sh. Ruchir Bhatia, Advocate, for petitioner, in Item Nos.1, 3, 4, 5, 19, 21, 31, 32, 33, 35, 46, 48, 49, 53, 54, 56, 65, 68, 69, 71, 75, 76, 85, 98, 99,103, 104, 105, 110 Sh. Virag Tiwari, Sh. K.J. Bhat and Sh. Nitin Gulati, Advocates, for petitioners, in Item Nos.6, 13, 96. Sh. Gajanand Kirodiwal and Sh. Saarthak Bansal, Advocates, for petitioner, in Item No.14 Sh. Nitin Gulati, Advocate, for petitioner, in Item Nos.18, 20, 47, 58, 59, 67, 79 Sh. Vasdev Lalwani, Sh. S.C. Jain and Sh. Rohit Gautam, Advocates, for petitioner, in Item No.22,27, 28, 77, 78, 80, 81, 83 Sh. Raj. K. Batra, Sh. Rajesh Jain and Sh. Kapil Chaudhary, Advocates, for petitioner, in Item No.29, 34, 39, 41, 45, 52, 57, 61, 62, 64, 70 Sh. Vineet Bhatia, Sh. Chanderkant and Sh. Saket Grover, Advocates, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessed and monies disbursed in a time-bound manner; the revenue's contentions, in all these cases, is that the obligation to process refund claims and to pay interest would arise, only after all the necessary details - including Central Sales Tax (CST) documents are furnished; it also argues that after introduction of Section 38 (7) (d) - to the DVAT Act, in 2012, the assessee/dealers' refund claims cannot be said to be complete in case any amounts are due and owing under the CST regime. Two earlier decisions of this court, i.e. Swarn Darshan Impex (P) Ltd v Commissioner, Value Added Tax (2010) 31 VST 475 (Del) and Prime Papers & Packers vs Commissioner of VAT & Anr. (2016) 94 VST 347(Delhi) had elaborately considered the relevant provisions and given rulings about the obligatory nature of the time limit within which refund claims had to be processed. The respondent/revenue, i.e. the DVAT department, however, urges that the ratio in Swarn Darshan Impex (supra) is not applicable any longer, due to the amendment in 2012 and that Prime Papers & Packers (supra) did not properly consider the impact of the said amendment and other relevant provisions of the CST and Rules. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as required under Central Sales Tax Act, 1956, shall be excluded. (8) Notwithstanding anything contained in this section, where - (a) a registered dealer has sold goods to an unregistered person; and (b) the price charged for the goods includes an amount of tax payable under this Act; (c) the dealer is seeking the refund of this amount or to apply this amount under clause (b) of sub-section (3) of this section; no amount shall be refunded to the dealer or may be applied by the dealer under clause (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 amount of the corresponding ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgment is as follows: "7. A plain reading of Section 38, which deals with refunds, makes it clear that by virtue of Sub-section (3) thereof, in the case where a person 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 to the next tax period. The provisions of Section 38 (3) uses the expression "shall" and, therefore, it is clear that the refund has to be made within two months from the date of the return. 8. At this point, it would be appropriate to deal with the submission made by Mr. Taneja that the period prescribed in Section 38 (3) as also the period prescribed in Section 38 (5) of the said Act were merely directory and not mandatory....." The court thereafter discussed the revenue's contention that Section 38 (3) was not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussion and operative portion of the said judgment is as follows: "10. The understanding of the Department regarding the calculation of the time limit under Section 38(3) of the Act being subject to Section 38(7), as was advanced before this Court, does not appear to be consistent with the legislative intent behind the enactment of Section 38 of the Act. It is a time-bound composite scheme which requires, in the first place, the DT&T to take immediate action upon receiving a return in which a refund is claimed. What Section 38(2) expects the Respondent to determine upon examining 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. Circular No. 6 of 2005 dated 15th June 2005 issued by the Commissioner VAT is binding on the DT&T. It curtails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 38 (3) opens with the words "Subject to sub-section (4) and sub-section (5) of this Section" and proceeds to refer to any amount remaining due "after the application referred to in sub-section (2) of this Section". If Section 38(7) is read in the context of Section 38(3) of the Act, it becomes clear that those time limit will have to be calculated in the context of the Commissioner determining that some other amount is due under the DVAT Act or the CST Act against which the refund claimed requires 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner VAT to review the issue of grant of refunds on priority basis 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 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." Petitioners' contentions 5. The petitioners argue that the DVAT authorities' contentions with regard to the time-frame under Section 38(3) being suspended as it were wherever dealers do not furnish statutory documents, such as C-Forms, FForms and H-Forms under the Central Sales Tax Rules, is misplaced. They urge that the DVAT Act was enacted pursuant to Entry 54 of the List 2 to the Seventh Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first proviso to Section 6(2)(a) or a declaration under Section 6(A)(1) or Section 8(4) may be obtained. Learned counsel submitted that pursuant to this power, Rule 4 of the Central Sales Tax (Delhi) Rules, 2005 prescribe the manner of furnishing the forms which is as follows: "in addition to returns required under Rule 3, every dealer shall also furnish to the Commissioner a reconciliation return for a year in form-9 relating to the receipt of declarations/certificates (statutory forms) within a period of 6 months from the end of the year to which it relates. The return shall be filed electronically." 7. It is argued by learned counsel that in view of the above Rule which was brought into force from 05.03.2014, furnishing of declarations in FormsC, F, J, I etc. is dispensed with and these forms are to be furnished in original if the Commissioner directs the dealer to furnish them during the seven years from the end of the year to which they relate. Learned counsel especially relied upon the proviso to the Rule. Learned counsel also emphasized that under Rule 4(1) instead of a declaration, only a reconciliation return within six months from the end of the concerned year is requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they had defaulted, or had consumed some time to file relevant details, only such time could be excluded for the purposes of calculating the interest. Wherever the processing took place after the lapse of the period prescribed under Section 38(3), the question of denying any interest for any period did not arise. 9. Learned counsel relied upon the judgment of the SC in Commissioner Sales Tax v. Indira Industries 122 STC 100 (SC) for the proposition that an interpretation adopted by the taxing authority on the law is binding on it and that it cannot be heard to advance arguments which is contrary to its own understanding. It was stated that such being the case, the consistent trend of circulars issued by the DVAT authorities belie and undermine its contentions in these proceedings, i.e. that the timelines prescribed under Section 38(3) would not apply where statutory forms and declarations under the Central Sales Tax Act are not furnished by the dealers concerned. Contentions on behalf of the DVAT authorities 10. Learned counsel for the revenue submit that by virtue of Sections 3 and 7 of the DVAT Act, certain provisions of the CST Act would not apply to determine whether or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing refunds with the filing of statutory forms under the CST Rules. It was, therefore, argued that by virtue of Rule 4 of the Central Sales Tax (Delhi) Rules, every dealer necessarily should furnish reconciliation returns for any year in Form-9 relating to receipt of applications/certificate within six months from the end of the year to which they relate. This document, Form-9 contains details on account of the total Central Sales made under various provisions of the CST Act and total number of statutory forms received against those and value of pending statutory forms against total central sales made. Nevertheless, this form is not in substitution of the original declaration forms, i.e. C, E1, F, H etc, which have to be necessarily provided - in original to the concerned authority. Highlighting this as an important imperative, learned counsel states that the original forms contained the seal and stamp of the issuing authority and it would authenticate the veracity of transactions claims under the Central Sales Tax Act by the dealer. Unless such forms are furnished physically, it is not possible to verify the credentials and authenticity of the refund claims. 12. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm-C or Form-F or the certificate in Form E-I or Form E-II shall be furnished to the prescribed authority within 3 months after the end of the period to which the declaration or the certificate relates." It is submitted that Rule 12(7) of CST (Registration and Turnover) Rules, 1957 inter alia mandates furnishing of the said declaration(s)/certificate(s) in statutory Forms to the prescribed authority within a specified period. 14. Learned counsel relied upon the judgment of this Court in Anand Traders v. Commissioner of Sales Tax 2014 202 ECR 273; Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra 1975 (35) STC 571 (SC) and India Carbon Ltd. v. State of Assam 1997 106 STC 460 (SC) to say that the State mechanisms are to prevail in respect of levy and collection of Central Sales Tax dues. Thus, when it came to refunds under both Central Sales Tax Act and DVAT, the provisions of Section 38(7)(d) have to prevail. Learned counsel submitted that the so-called understanding of the Department, in the circulars, to the extent it is contrary to law cannot create any enforceable right. Analysis and findings: 15. The detailed submissions of the parties notwithstanding, the controver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder. Pursuant to these provisions, dealers provide returns through forms. The amendment to the CST (Delhi) Rules, w.e.f. 05.03.2014, altered Rule 4 and a new Form 9 (Reconciliation Form) had to be furnished by dealers. This form is both comprehensive - and, at the same time, cumbersome. It requires dealers to provide exhaustive details of their turnovers; including CST turnovers and the types of central forms (C, E-1, E-2, H, I & J). The forms require four years' details (2010-11, 2011-12, 2012-13 and 2013-14) that dealers were to furnish. 18. The Commissioner of DVAT, by various circulars (13 of 2014-15 dated 29.09.2014; 30 of 2014-15 dated 31.03.2015; 21 of 2014-15 dated 08.11.2015 and 26 of 2014-15 dated 16.02.2016) extended the period for furnishing returns in Form-9. Even more importantly, by Circular No.10 of 2012-13 dated 13.07.2012, all registered dealers who had made stock transfer or central sales on concessional rates of tax during 2009-10 and 2010-11 were asked to file requisite information online, to avoid inconvenience, "adverse assessment and penalty at a later date." This is evident from a notification issued under Sections 70(2) and (3) of the DVAT Act. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where in his opinion it is necessary or convenient to do so, the Commissioner may issue notifications for carrying out the purposes of this Act:" Thus, it is clear that the above notification, in the wake of amendment to Section 38 (on 18.06.2012) had to be read together with it. Circular No.10 dated 13.07.2012 issued in this regard, also clarified the department's understanding and is in the following terms: "CIRCULAR NO. 10 OF 2012-13 Subject: Online submission of information regarding Central Declaration forms The Department of Trade and Taxes has introduced the facility for online filing of information regarding Central Declaration Forms submitted, Central Declaration Forms missing and tax deposited on account of missing forms. This application can be accessed through the link titled "Central Forms" on dealer login rage on the website of the Department www.dvat.gov.in. All registered dealers, who have made stock transfer or central sales on concessional rate of tax during 2009-10 and 2010-11, have been requested to file the requisite information online so as to avoid inconvenience, adverse assessment and penalty at a later date, vide Circular No.5 of 2012-13 issued on 29/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even though the amendment to Section 38(7) was made in June 2012, within three weeks, a statutory notification followed by circulars was issued advising all dealers to furnish requisite details online and to not file the original copies of the declarations. The language of Section 38(7)(d) nowhere specifies that actual physical or hard copy of the original certificate is required. Moreover, the necessary form, i.e. Form-9 elicits exhaustive details in respect of CST and concessional duties with regard to receipt and pendency of declarations in Form E1, E2, F, H etc. Each of these relate to specific quarters for all the previous four years and are to be furnished by the dealers. Such being the case, the Revenue's contention that the mandate of Sections 11(2) of the DVAT Act and Rule 12 of the CST Rules, overriding all other concerns and suspending as it were, the obligation to frame the assessments and process refunds within the timeframe prescribed under Section 38(3) is misplaced and rejected as unacceptable. There is nothing in the language of these provisions compelling the dealers to provide original certificates in the physical format. Once both the parties agree that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils. 22. Indira Industries (supra) is authority for the proposition that whilst circulars are not per se binding and cannot override express provisions of law, nevertheless, if they are not inconsistent with law, they bind the statutory authorities. In the present instance, there is no conflict of the kind which the Revenue projects, between the circulars which it issued and pursuant to which dealers furnished online particulars, on the one hand, and Section 38(7) of the DVAT Act or other provisions of the CST Act. 23. In view of the above discussion, it is held that in all these cases, the ratio in Prime Papers & Packers (supra) is good law and does not call for a review. Furthermore, the declaration in Swarn Darshan Impex (supra) and Prime Papers & Packers (supra) would mean that for the period beyond what is stipulated under Section 38(3), the Revenue would be under an obligation to pay interest till the point of time the refund claim is adjudicated and allowed. If, for any reason, during the processing of the refund claim (but after the two month period), the assessee is called upon to furnish particulars relating to any inter-state transactions for the purposes of verificati ..... 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