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2017 (4) TMI 831 - DELHI HIGH COURT

2017 (4) TMI 831 - DELHI HIGH COURT - TMI - Revision of order - Section 74A of the DVAT Act - Entitlement to interest u/s 42 of the DVAT Act - delayed grant of refund - Held that: - the undated and unsigned notice proposing the exercise of the revisionary jurisdiction was at best vague. It did not satisfy the basic requirement of the law - if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that .....

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r which calls for disapproval in strongest terms. - The Court accordingly sets aside the undated and unsigned notice of the Commissioner, VAT uploaded upholding on the Petitionerís Web ID proposing the invocation of the powers under Section 74A of the DVAT Act to revise the order dated 14th October 2016 of the OHA - VAT commissioner directed to ensure that the refund due to the Petitioner in relation to the monthly returns filed in July 2010 together with the interest accrued thereon is .....

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ted and unsigned notice No. F.CD:105350157/Ward 63 posted at the Web ID of the Petitioner for revision under Section 74 (A) of the orders of the learned Special Commissioner-II/OHA requiring the Petitioner to appear before the Respondent, Commissioner, Trade & Taxes on 28th February 2017 at 11.30 am. 2. Background to the present petition is that sales of petroleum products and lubricants made by the Petitioner in Delhi include sales in the course of inter-State trade and commerce. It was sta .....

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d a default assessment of tax, interest and penalty under Sections 32 and 33 of the Delhi Value Added Tax Act, 2004 ( DVAT Act ). The Petitioner then filed objections under Section 74 of the DVAT Act before the Objection Hearing Authority ( OHA ). 3. By an order dated 14th October 2016 Special Commissioner-II/OHA upheld the objections and set aside the impugned order of the Value Added Tax Officer ( VATO ). Paras 8 and 9 of the said order, which set out the entire context in which the objections .....

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r-state sales in the licence/agreement dated 31st March 2005 signed between BPCL and the Objector. After hearing the argument of learned counsel and DR and taking into account the facts and the circumstances of the case, it is observed, in the present case that the assessment was framed by rejecting inter-state sales only on the basis of a clarification sought by the then learned AA from BPCL wherein it is mentioned that the dealer is authorized to sale MS/HSD to all customers coming to RO premi .....

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Himachal Pradesh etc. It is just responded that the dealer is authorized to sale MS/HSD to all customers coming to RO premises for purchase of the same through Nozzle. I am of the view that the learned AA is failed to take up the issue further with the authorities of BPCL to clarify the ambiguity on the issue in question as the same was not clarified specifically from BPCL. With regard to this, the learned counsel for the Objector has raised a valid point that it is nowhere mentioned in the lett .....

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C along with evidence for dispatch of goods. Therefore, I am of the considered view that even if the agreement between M/s. Garg Roadlines and BPCL is prohibiting him to effect central sales, without having any specific reason or prohibition by CST Act or Rules, legitimate transactions of the dealer duly supported with relevant records/documents cannot be denied. Therefore, the impugned order passed by the learned AA cannot be upheld and liable to be set aside. Accordingly, the objection is acce .....

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d facts of the case. 4. The matter should have normally come to an end with the above order dated 14th October 2016 and the Petitioner ought to have been issued the refund. In this context, it requires to be noticed that Section 38 of the DVAT Act provides that in the case of a monthly return, refund is to be allowed within one month from the date of filing the return and in any other case the refund is to be allowed within two months from the date of filing the return. In the present case under .....

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d within fifteen days from the date of furnishing the return. In other words there was absolute no impediment for the passing of the refund order. The delay in granting refund has resulted in the Petitioner being entitled to receive interest in terms of Section 42 of the DVAT Act. 5. In several judgments, this Court has explained the law in relation to refund under the DVAT Act. Illustratively the decisions in Ingram Micro India Pvt Ltd v. Commissioner, Department of Trade & Taxes (2016) 89 .....

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correctness of the amount of the cash refund claimed and shall pass the refund order in DVAT-22 within a period of 15 days from the date of receipt of the return in the Front Office without fail, unless the return of the dealer has been picked for seeking additional information or audit and in such cases, intimation shall be given by the Audit Wing of the Department/the designated VAT authority of the wing/VATO concerned in Audit wing to the concerned VATO in the Operation Wing within 10 days fr .....

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rd copy shall be retained by the ward VATO. In case the amount lesser than the amount of refund claimed by the dealer is allowed by the VATO in Operation Wing as refund payable for the reasons other than the reason of set off/adjustment, a covering letter shall be attached with the dealers copy of DVAT-22 explaining the reasons of such reduction and the covering letter as well as dealers copy of DVAT-22 shall be sent to the dealer. 6. With there being utter laxity on the part of the DT&T in .....

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mounts - through tabular chart. The Respondents are directed to process the Petitioner s case for refund and ensure that the amounts are paid before the next date of hearing. List on 22nd March 2017. 7. In the meanwhile, the Petitioner noted that on its Web ID the impugned unsigned and undated notice proposing the revision of the order of OHA under Section 74A of the DVAT Act was uploaded. The said notice reads as under: Whereas, your case has been referred to this office for considering it for .....

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acturer, list of items manufactured or items dealt by him. 8. The present petition was thereafter filed on 7th March 2017 and came up for first hearing on 10th March 2017. The Court directed by its order dated 10th March 2017 that on the next date of hearing, all original documents pertaining to the impugned notice along with relevant documents shall be produced in Court. It was further directed that no further proceedings shall be conducted in relation to the impugned notice (Annexure P-1) till .....

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rected to ensure that the amounts were remitted. It is informed by the Respondents, i.e., DVAT Department that on 17th February 2017 a notice was issued under Section 74A of the DVAT Act proposing to revise an order. Though the notice is unclear as to which period is involved, the details of the proposal, as contained in the file produced in Court by the Respondents, clarify that it is in respect of the refund claimed for ₹ 12,55,471 for the second quarter of AY 2010-11. The file further r .....

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how cause notice dated 17th February 2017 and further proceedings emanating therefrom have been stayed. That writ petition is now listed on 12th April 2017. It is quite evident from the above discussion that only impediment which the Revenue/DVAT has put forward to withhold the Petitioner s claim for the larger sum of over ₹ 4 crores is the fresh show cause notice under Section 74A issued on 17th February 2017. Considering the circumstances, this Court is of the opinion that the Respondent .....

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three weeks from today. The petition is accordingly disposed off. A copy of this order be given dasti to parties under the signatures of the Court Master. 10. In the counter-affidavit filed on behalf of the Respondent, it is stated that the Territory Manager, BPCL by letter dated 2nd June 2014 informed the DT&T that the Petitioner was authorized to sell MS/HSD to all the customers coming to the retail outlet premises for purchase of the same through nozzle . It is then stated that the Petit .....

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sale and not 'business to business' sale. Since there was no movement of goods from one State to another, to bring it within the ambit of inter-state sale as contemplated by Section 3 of the Central Sales Tax Act, 1956 ('CST Act ), the VATO decided to treat such inter-state sales as local sales. 11. The Respondent however acknowledges that the OHA by the order dated 14th October 2016 has set aside the above default assessment order. No attempt has been made by the Respondent to poin .....

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e history of the case including the fact of all C Forms and GRs were verified from the concerned states and transporters and found to be genuine. It also notes that the OHA observed that since the Objector has in his possession all the records including C forms and the proof of dispatch of goods, transactions of the dealer cannot be denied. It also notes that the OHA observed that even if the agreement between BPCL and Garg Roadlines prohibited him from effecting central sales, without having an .....

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te which was supposed to be considered by the Commissioner is not referred to in the noting part of the file. The noting part is from pages 1/N up to 14/N. What is relevant for the present purpose is that from pages 1/N to 13/N, the notings speak of the claim for refund. Page 13/N is exclusively on the subject refund of July 2010 . In the said note prepared by Mr. Jitendra Kumar, AC, Ward-63 it is inter alia noted that in compliance with the order of the OHA dated 14th October 2006 the fresh ord .....

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in particular finding that nowhere in the letter of the Manager, BPCL it is mentioned that the Objector cannot make inter-state sale. Following this, it its noted: In the absence of categorical clarification by the BPCL whether inter-state sales can be made by the dealer and also the fact that petrol pumps are licensed to make retail sale from their outlets, it is not very clear whether sales of this nature can be effected by the said dealer. It is also likely to give rise to tax loss to the exp .....

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took a conscious decision that the revisionary power under Section 74A should be invoked. What the notings portion of the file next contains are the order sheets in the revision proceedings. This begins with an order dated 17th February 2017 signed by the Commissioner, VAT which simply states: The matter of M/s. Garg Roadlines has been received from Joint Commissioner (Zone-VI) for invoking the provisions of revision under Section 74(A) of DVAT Act, 2004 for revision of impugned order of OHA. I .....

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ustifiable reason for invoking the revisionary power under Section 74 A of the DVAT Act. Even the reasons why the order of the OHA is unacceptable to the DT&T are absent. As noticed earlier, the impugned notice (undated and unsigned) uploaded on the Petitioner's web id proposing the exercise of the revisionary power under Section 74 A DVAT Act is equally vague and without any reasons. 16. There is also no application of mind to the consequences of the decision to invoke the revisionary p .....

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at this stage would entail an additional burden on the exchequer in the event the attempt was not successful. 17. The power under Section 74A of the DVAT Act is not to be exercised slightly. It is a power coupled with the duty to act responsibly and by the competent authority applying mind to the relevant facts and circumstances of the case. The notes on file proposing the exercise of power under Section 74A of the DVAT Act in this case do not satisfy this basic requirement. In the present case .....

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