TMI Blog2023 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment dated 02.08.2017, giving rise to a demand amounting to Rs.1,25,60,785/- via order dated 02.08.2017; which was, ultimately, set aside by the OHA via order dated 26.08.2019. Rule 34(4), which is invoked by the revenue, has no application to the instant case, as is evident upon a plain reading of Sub-rule (1) and (4) of the said Rule. The OHA, in a brief order, concluded that ITC was wrongly denied to the assessee, i.e., the objector, since it had in its possession valid tax invoices and there was no dissonance in the 2A-2B mismatch report of the purchasing and selling dealer. OHA noted that the Assessing authority in the assessment order has not brought any material to prove collusion between purchasing dealer and selling dealer and also [did] not invoked Section 40A of the DVAT Act . Accordingly, the assessee's objections were accepted and the impugned order dated 02.08.2017 passed under Section 32 of the 2004 Act was set aside - while the OHA ruled on the legal tenability of the order dated 02.08.2017, concerning objections filed under Section 74 of the 2004 Act, it could not have stymied the accrual of interest which was based on a claim lodged by the assessee vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning till the date when the refund was paid. This relief is sought by the assessee in terms of the provisions of Section 38(3)(a)(ii) read with Section 42 of the Delhi Value Added Tax Act, 2004 [hereafter referred to as the 2004 Act ]. 3. The rate at which interest could possibly be granted, even as per the assessee, would be simple interest at the rate notified by the Government; to be computed in accordance with the provisions of Section 42 of the 2004 Act. 4. The revenue, on the other hand, claims that since the refund arose in favour of the assessee, pursuant to the order dated 26.08.2019 passed by the Objection Hearing Authority, [in short, OHA ], the interest would run from the date when a claim for refund is made. The claim for refund, according to the revenue, is required to be made in the prescribed form, i.e., DVAT-21. 5. The foregoing are the broad contours of the issue that arises for consideration. 6. However, for determining the issue at hand, the following facts are required to be noticed: i) The assessee filed its revised return on 10.07.2015 for the fourth quarter of the Financial Year (FY) 2014-15 [hereafter referred to as the relevant tax peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt via the very same order had fixed an end date by which interest was required to be paid, albeit with a caveat that if it was not paid by the given date, compensatory cost amounting to Rs. 50,000/- would also have to be forked out. The end date fixed was 16.08.2019. (xii) Notably, on the partial refund amounting to Rs. 1,30,96,335/- remitted to the assessee, the revenue in consonance with the aforementioned order of the High Court, paid Rs. 15,82,874/- as interest to the assessee. (xii)(a) This aspect of the record has been brought to the fore to highlight the fact that insofar as the partial refund was concerned, the Court applied the statutory principle outlined in Section 42 of the 2004 Act and Rules 34 and 36 of the 2005 Rules. 7. The remaining refund i.e., Rs.1,25,60,785/-, which, as indicated above, stands already paid, followed the following trajectory. (i) Against the notice of default assessment dated 02.08.2017, the assessee filed objections before the OHA on 09.10.2017. These objections were allowed by the OHA on 26.08.2019. (ii) Since once again there was procrastination in refunding the amount, the assessee instituted a writ action in this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been lodged in this Court. The revenue has preferred the above-captioned appeal against the Tribunal's order dated 20.06.2022, while the assessee's writ action, which is a mirror image of the revenue's appeal, seeks implementation of the Tribunal's order dated 20.06.2022. 9. It is against this backdrop that the following questions of law were framed in the revenue's appeal by a Coordinate Bench of this Court. I. Whether the Ld. Tribunal in the impugned order failed to comply with the statutory intent and purport of Section 38 of the DVAT Act read with sub-rule (4) to Rule 34 of the DVAT Rules, 2005? II. In case a refund arises in favour of the Assessee pursuant to an Order passed by the OHA/Special Commissioner under the DVAT Act, whether such an Assessee for the purpose of claiming such refund is not mandatorily required to follow the provisions of sub-rule (4) to Rule 34 of the DVAT Rules and thereby need not file a fresh Claim for refund in form DVAT-21 along with a certified copy of such Order passed by the OHA/Special Commissioner? III. Whether the Ld. Tribunal was right in not following the view taken by it qua a similar matter? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n effect on 06.12.2019 by the assessing authority. This, however, did not efface the fact that the assessee had claimed interest in its return on the entire amount, i.e., Rs.2,56,57,120/-. Because no notice either under Section 58 or Section 59 had been issued, the assessee was entitled to the refund after the expiry of two months, commencing from the date when the revised return was filed. Two months from that date came to an end on 10.07.2015 and therefore, the notice issued on 11.09.2015 could have had no legal impact on the trigger date stipulated for the grant of refund in Section 38(3)(a)(ii) of the 2004 Act. 12.2 In support of this plea, reliance was placed on the following Judgements: (i) Swarn Darshan Impex (P) Ltd. V. Commissioner, Value Added Tax and Anr, 2010 SCC OnLine Del 4697 (ii) IJM Madras Corporation Berhad and others v Commissioner of Trade and Taxes, 2017 SCC OnLine Del 11864. 12.3 Furthermore, the date when interest had to accrue to the assessee was frozen by this Court when it disposed of WP(C) 12876/2020 via the order dated 22.07.2019. In this order, the Court made it clear that on Rs.1,30,96,335/-, the assessee would be entitled to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of the 2005 Rules would have no application. The assessee was not obliged to lodge its claim for refund in Form DVAT-21. The contents of Form DVAT-21 clearly suggest that the said form is not required to be filed in those cases where the refund is embedded in the assessee's return . [See Commissioner of Income Tax, Bombay v. Scindia Steam Navigation Co. Ltd, (1962) 1 SCR 788, T.D. Kumar and Brothers (P) Ltd. v. Commissioner of Income Tax, Calcutta, (1967) 63 ITR 67 and Commercial Taxes Officer, Special Circle I, Jaipur v. Badri Narain Sita Ram and Another, 1979 SCC OnLine Raj 238]. 12.10 Even in cases where proceedings are pending and refund is withheld in the exercise of powers conferred under Section 39 of the 2004 Act, on the grounds mentioned therein, the assessee would be entitled to interest as provided in Section 42(1), if, as a result of an order passed in appeal or any other proceedings, the assessee becomes entitled to a refund. [See Ranbaxy Laboratories v. Union of India, (2011)10 SCC 292 (Paras 13 and 19)]. Reasons and Analysis: 13. We have heard the learned counsel for the parties and perused the record. The following broad facts, as noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand security from the person pursuant to the powers conferred in section 25 of this Act within fifteen days from the date on which the return was furnished 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 sub-section (5). 14.1 Clearly, a plain reading of the said provision would show that subject to other provisions of the very same Section and the Rules, the Commissioner is obliged to refund the tax, penalty and interest, if any, paid by an assessee, which is more than the amount due from it. Furthermore, before ordering a refund, the Commissioner is empowered to apply the excess amount towards the recovery of any other amount, inter alia, due under the 2004 Act. The assessee/dealer, on the other hand, is given the right to elect whether it would receive the refund or have it carried forward to the next tax period as a tax credit. 14.2 In those cases where the assessee/dealer elects to recover the refund, interest accrues in favour of the assessee/dealer depending on the tax period for which the refund is claimed. For assesses/dealers, where the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund made in Form DVAT-21 shall not be again included in the return for any tax period. (3) The Commissioner may, for reasons to be recorded in writing, issue notice to any person claiming refund to furnish security under sub-section (5) of section 38 in Form DVAT 21A, of an amount not exceeding the amount of refund claimed, specifying therein the reasons for prescribing the security. (4) Where the refund is arising out of a judgement of a Court or an order of an authority under the Act, the person claiming the refund shall attach with Form DVAT-21 a certified copy of such judgement or order. (5) When the Commissioner is satisfied that a refund is admissible, he shall determine the amount of the refund due and record an order in Form DVAT-22 sanctioning the refund and recording the calculation used in determining the amount of refund ordered (including adjustment of any other amount due as provided in subsection (2) of section 38). (5A) The order for withholding of refund/furnishing security under section 39 shall be issued in Form DVAT-22A. (6) Where a refund order is issued under sub-rule (5), the Commissioner shall, simultaneously, record and include in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her or not such dealer or person is a party to the arrangement, albeit in such a manner as is considered appropriate, to counteract any tax advantage obtained by the dealer from or under the arrangement. 18. Therefore, what emerges is that, while the OHA ruled on the legal tenability of the order dated 02.08.2017, concerning objections filed under Section 74 of the 2004 Act, it could not have stymied the accrual of interest which was based on a claim lodged by the assessee via its revised return. The assessee's right to refund accrued on completion of the timeframe given in Section 38(3)(a)(ii) of the 2004 Act, i.e., on 10.09.2015. The proceedings taken out thereafter, i.e., issuance of notice under Section 59(2) of the 2004 Act on 11.09.2015 followed by a default assessment order dated 02.08.2017 and the adjustment order dated 25.08.2017, were non-est in the eyes of law. The fact that the OHA via order dated 26.08.2019 set aside the notice of default assessment dated 02.08.2017, brought to life the claim for refund embedded in the assessee's return with the removal of the clog placed upon it by the assessment order dated 02.08.2017. As a matter of fact, in our view, Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the issue whether refund based on inverted duty structure can be granted on input services as well. It is in this context the Court ruled that the refund on account of inverted duty structure was available only against input tax levied on goods, and not services. The Court, in this context, examined Section 54(3) of the Central Goods and Services Tax Act, 2017 and the Rules made thereunder, more particularly, in the backdrop of Rule 89(5). In our view, this judgement does not shore up the case of the revenue. 22. Likewise, the decision rendered by the Supreme Court in E.D. Sassoon Company Ltd. v. The Commissioner of Income Tax, Bombay City, (1995) 1 SCR 313 has no application whatsoever. This was a case where the Supreme Court was called upon to rule as to who would bear the liability for tax qua managing agency commission earned for the broken period . The facts, as discernible from the judgement, show that E.D. Sassoon Company were managing agents for many companies. While the managing agency agreement was operable; with the consent of those companies qua whom they were appointed as managers, the agreement was assigned to another set of entities. 22.1 It is in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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