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2019 (8) TMI 573

..... s were pending since no notice either under Sections 58 or 59 of the DVAT Act were issued to the Petitioners within the time period specified under the DVAT Act - extended period of limitation - penalty - HELD THAT:- Under Section 38 (3) (a) (ii) the refund has to be processed within two months from the date of filing of the return if the claim is made in the return. In terms of Section 38 (4) if a notice of audit, investigation or inquiry has been issued under Sections 58 and 59 of the DVAT Act, then the amount shall be carried forward to the next tax period. In the Petitioner’s case when the return for the fourth quarter 2013-2014 was filed claiming the above refund amount, no such proceedings were pending. There was no notice either under Section 58 and 59 of the DVAT Act had been issued to the Petitioner within two months from the date of filing of such return claiming the refund. This was true even of the revised return filed in January, 2015. Consequently, the Respondent did not pass any order under Section 38 (4) carrying forward the refund amount. Resultantly, as far as the fourth quarter of 2013-2014 is concerned, the two-month period under Section 38 (3) (a) (ii) of .....

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..... med was enhanced to ₹ 6,26,56,549/-. The revision became necessary as a result of the Petitioner adopting the Accounting Standard-7 applicable to Engineering Construction Contracts (ECC). 4. On 17th September, 2014 the Value Added Tax Officer (VATO) issued notice to the Petitioner under Section 59(2) of the DVAT Act for the period 2013-14 to appear on 30th September 2014. Apparently, no hearing took place on the appointed date. Nearly three years thereafter on 29th March, 2017 notices of default assessment of tax, interest and penalty were issued under Sections 32 and 33 of the DVAT Act for the entire year of 2010-2011 invoking the extended period. A demand of tax in interest in the sum of ₹ 8,80,89,920/- was created. Penalty of an equal amount was also imposed under Section 86 (10) of the DVAT Act. 5. On 27th May, 2017 the Petitioner filed two objections against the above default notices before the Special Commissioner i.e. the Objection Hearing Authority (OHA). In terms of Section 35(2) of the DVAT Act, by virtue of the above objections being pending for the OHA, the demand created remained stayed till their resolution. 6. On 1st March, 2018 a fresh notice under Secti .....

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..... denial of refund being contrary to Sections 38, 39 and 42 of the DVAT Act, it was also contrary to Circular No. 6/2005-2006 (File No.VAT/Policy/2005/796) dated 15th June, 2005 which required the VATOs to process refunds in a time bound manner. This was followed by Circular No.12/2005-2006 dated 6th July, 2005 obliging the VATO to furnish a report regarding cases where refund have been claimed in the return and the details of disposal of such cases. Reference is also made to Circular No. 36/20052006 dated 19th October, 2005 where the Ward Authorities were advised to send the refund cases in DVAT- 22 with a typed covering letter containing the information sought by the circular. It is stated that when even this did not improve the position, Circular No. 3/2009-2010 dated 16th June, 2009 was issued stating that if refund applications were not processed without delay individual responsibility would be fixed and reflected in the assessment of the officer concerned. 12. It is further contended that since the refund was not given to the Petitioner within two months as per Section 38 (3)(a)(ii) of the DVAT Act, the Petitioner was entitled to interest in terms of Section 42(1) of the DVAT .....

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..... ne year from 14th February, 2012 prescribed under Section 34(2) of the DVAT Act. The demand for annual 2013-2014 has already been set aside. While the demand for annual 2010-2011 is pending consideration before the OHA, the question is whether the mere pendency of that demand can deprive the Petitioner of its refund. 17. As far as the demand for 2010-2011 is concerned, for the same period an assessment was made by the VATO (Audit) on 16th July, 2014 which was challenged in this Court by the Petitioner by filing WP(C) No. 6335/2014 questioning the jurisdiction of the VATO. By a judgment dated 3rd October, 2016 this Court set aside the aforementioned assessment order dated 16th July, 2014. On that date WP(C) No. 4901/2015 relating to refund of ₹ 9,94,35,199/- for the month of July, 2010 was allowed by this Court. The Respondent challenged the above order dated 3rd October, 2016 in WP(C) No.6335/2014 in the Supreme Court in SLP(C) (CC) No.9334/2017 which was dismissed by the Supreme Court on 7th July, 2017. 18. The fresh default notices of assessment under Section 59(2) were issued on 17th February, 2017 which was challenged by filing WP(C) No. 2703/2017. Since no stay was grant .....

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..... ed or claim for the refund was made. (6) The Commissioner shall grant refund within fifteen days from the date the dealer furnishes the security to his satisfaction under subsection (5). (7) For calculating the period prescribed in clause (a) of sub- section (3), the time taken to - (a) furnish the security under sub-section (5) to the satisfaction of the Commissioner; or (b) furnish 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) to (11) omit .....

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..... t was observed by this Court as under: 16. In any event, even if we assume that the said notice was issued by the respondents and that it had been received by the petitioner, it would not change the position in law. Sub-section (4) of Section 38 has to be read with the provisions of sub-section (3) of Section 38. By virtue of the latter provision, the refund had to be paid to the petitioner within two months from the date of the return furnished by him. No such notice under Section 59 requiring additional information had been issued during that period. Consequently, the subsequent purported issuance of notice under Section 59 cannot be taken as a ground for not paying the refund to the petitioner. In this connection, the provisions of sub-section (7) of Section 38 also needs to be examined. The said provision stipulates that for calculating the period prescribed in Section 38(3)(a), the time taken to, inter alia, furnish additional information sought under Section 59 shall be excluded. It is obvious that exclusion can only be when the period of limitation itself has not run out. The consequence of this discussion is that the notice under Section 59 in connection with refund has to .....

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