TMI Blog2017 (11) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... an that interest would be payable after the period specified in clause (a) to sub-section (3) to Section 38 of the Act i.e. the date on which the refund becomes payable. Two sections, namely, Sections 38(3) and 42(1) do not refer to the date of filing of return. This obviously as per the Act is not starting point for payment of interest. Under sub-section (2) of section 39, interest would begin from the period specified in clause (a) to sub-section (3) to Section 38 of the Act, albeit the quantum of refund would depend upon the adjudication. In the present context, we would not like to go into the multifarious situations which may arise when an assessee files the revised return. It would be more appropriate and proper for the authorities under the Act to examine each and every case wherein a revised return has been filed and thereafter, determine whether the assessee would be entitled to interest and, if so, from which date, on the findings. We leave the question/issue open. It is directed that the authorities will examine the question of interest payable on refund and the date from which it is payable in accordance with the aforesaid dictum and principles - petition allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in case of refund from the date of filing of the Return or after the period specified for processing of the refund/returns in terms of clause (a) to sub-Section (3) to Section 38 of the Act. 7. In order to appreciate the controversy and answer the contentions, we would like to reproduce Section 38 which relates to refunds and Section 42 of the Act which relates to interest payment. Section 38 of the Act reads:- 38. Refunds.- (1) Subject to the other provisions of this section and the rules, the Commissioner shall refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. (2) Before making any refund, the Commissioner shall first apply such excess towards the recovery of any other amount due under this Act, or under the CST Act, 1956 (74 of 1956). (3) Subject to sub-section (4) and sub-section (5) of this section, any amount remaining after the application referred to in sub-section (2) of this section shall be at the election of the dealer, either (a) refunded to the person, (i) within one month after the date on which the return was furnished or claim for the refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sess the buyer to deny the amount of the corresponding tax credit claimed by such buyer, whether or not the seller refunds the amount to the buyer. (10) Where a registered dealer sells goods and the price charged for the goods is expressed not to include 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 without the seller being required to refund an amount to the purchaser. (11) Notwithstanding anything contained to the contrary in sub-section (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act. Section 42 of the Act reads:- 42. Interest (1) A person entitled to a refund under this Act, shall be entitled to receive, in addition to the refund, simple interest at the annual rate notified by the Government from time to time, computed on a daily basis from the later of (a) the date that the refund was due to be paid to the person; or (b) the date that the overpaid amount was paid by the person, until the date on which the refund is given. PROVIDED that the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is furnished or the claim for refund is made. We are not concerned in the present case with clause (b) to sub-Section (3) to Section 38 of the Act. 9. For clarity and understanding, we record that the expression tax period has been defined in Section 2(zi) of the Act to mean the period prescribed under the Rules. Rule 26 of the Delhi Value Added Tax Rules, 2005 ( Rules in short) prescribes the tax period which in some cases, it is pointed out, could be one month and in other cases, the period prescribed is quarter of a year. Thus, clause (i) and (ii) of sub-section 3 to Section 38 of the Act, refer to and mandate refund within one month or two months when tax period is monthly or quarterly, as the case may be. 10. Sub-section (4) to Section 38 authorizes and empowers the Commissioner to issue notice to an assessee as per the provisions of Section 58 of the Act, advising him that audit, investigation or inquiry into his business affairs will be undertaken. In such an event, the amount is to be carried forward to the next tax period as a tax credit in that period. The Commissioner is also entitled to seek additional information under Section 59 of the Act. In the context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the refund, simple interest at the annual rate notified by the government from time to time computed on a daily basis. It fixes the time from which the interest is payable i.e. the date on which refund was due to be paid to the assessee; or the date when the overpaid amount was paid by that person, whichever was later. Interest is payable up to the date on which the refund is given. Subsection (1), therefore, fixes the starting point and the end point. With reference to the starting point, the date on which the refund was due to be paid to the assessee or the date when the overpaid amount was paid by the assessee, whichever is later is applicable. There is also stipulation in the first proviso with regard to adjustment, deduction etc. with which we are not concerned in the present case. The second proviso stipulates that if the amount of such refund is enhanced or reduced, as the case may be, the interest would be enhanced or reduced accordingly. Explanation to the sub-section (1) states that if the delay in grating the refund is attributable to the assessee, whether wholly or in part, the period of delay attributable to him shall be excluded from the period for which interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next tax period. x x x xx 3. Imposition of tax (1) (4) The net tax of a dealer shall be paid within twenty one days of the conclusion of each calendar month. Explanation.- The obligation to pay the tax arises by virtue of this provision and is not dependent on furnishing a return, nor on the issue of a notice of assessment to the dealer. 17. Section 11 stipulates that an assessee would be liable to pay net tax, which is determined by the formula stipulated therein. Subsection (2) states that where the net tax of an assessee calculated under sub-section (1) is in the negative i.e. refund is payable, the dealer shall adjust the amount in the same tax period against the tax payable by him under the Central Sales Tax Act, 1956 and the assessee will be entitled to claim refund of any surplus amount. The Commissioner will deal with the refund claim in the manner prescribed in Sections 38 and 39 of the Act. There is no conflict between Section 11 and the interpretation given by us on the date from which interest is payable with reference to Section 42 read with Section 38 of the Act. We shall be referring to Section 39 of the Act subsequently. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be recorded in writing, either obtain security equal to the amount to be refunded or withhold the refund till such time the proceedings or audit has been concluded. The said power can be exercised as prescribed and stipulated in sub-section (1). Sub-section (2) states that where refund is withheld under sub-section (1), the person would be entitled to interest if as a result of the appeal or further proceedings or any other proceedings, he becomes entitled to the refund. In other words, under sub-section (2), interest would begin from the period specified in clause (a) to sub-section (3) to Section 38 of the Act, albeit the quantum of refund would depend upon the adjudication. To this extent on interpretation of sub-section (2) to Section 38, counsel for the parties are ad idem. 20. It has been highlighted to us that there may be cases wherein the assessee himself prefers and files a revised return. There could be a time gap between filing of the original return and the revised return. Questions may arise whether in such cases the assessee would be entitled to interest under Section 42(1) of Act from the date of filing of the original or from the date of filing revised return. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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