TMI Blog2023 (8) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... ained to FY 2012-13 as well as the period for April 2013 to December 2013 had been duly considered and ultimately disposed of by the respondents themselves in terms of the order of the OHA dated 31 October 2019. As would be evident from a bare perusal of Rule 34, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself. This clearly emerges from Rule 34(1) which uses the expression except claimed in the return . The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam [ 2023 (4) TMI 4 - DELHI HIGH COURT] and Consortium of Sudhir Power Projects [ 2023 (2) TMI 290 - DELHI HIGH COURT] . Once a claim for refund stands embodied in the return itself, there is no additional obligation pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y timeframe as prescribed in Section 38(3)(a)(ii) of the DVAT Act. It had asserted that in the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge the same and ensure that the refund was granted within two months. The petitioner also questions the validity of the impugned order dated 31 May 2022 and submits that any claim for refund which had fructified in accordance with the timelines prescribed by Section 38(3)(a)(ii) of the DVAT Act could not have been nullified by any demand of tax that may have either sprung into existence post the period of two months from the filing of the return nor could such an adjustment have been effected during the pendency of objections made by the petitioner with reference to Section 35 of the DVAT Act. The petitioner contends that Section 35(2) of the DVAT Act restrains the respondents from enforcing the payment of any amount of tax which formed subject matter of contestation before the Objection Hearing Authority [OHA] and thus such an amount cannot be viewed as an amount due and payable under the DVAT Act as envisaged in terms of Section 38(2). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Between 23 August 2017 and 15 November 2017, reassessment proceedings for FY 2012-2013 are stated to have been undertaken resulting in a fresh and revised demand of Rs. 4,92,09,468/- inclusive of interest and penalty coming to be raised against the petitioner. These assessments were again challenged before the OHA with objections being filed on 16 October 2017 and additionally on 14 December 2017 and 15 December 2017. 8. Pursuant to the order of the OHA dated 08 November 2016, reassessment proceedings were also undertaken with respect to the period starting from April 2013 to March 2014. The aforesaid proceedings were concluded between 23 November 2017 to 28 November 2017. The revised assessment orders framed in respect thereof were again questioned before the OHA by way of objections which were filed on 15 January 2018. The aforesaid narration thus concludes the events relating to the returns filed with respect to FY 2012-2013 and April 2013 to December 2013. 9. The writ petitioner has also adverted to the additional demands which came to be created thereafter pertaining to FY 2014-2015, January 2013 as well as for the period between April 2013 to June 2013. However, insof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the claim for refund was not attended to, the instant writ petition came to be filed sometime in April 2022. 12. Mr. Gulati, learned senior counsel appearing for the petitioner, submitted that the return for the quarter ending 31 March 2014 which had been duly filed on 31 March 2015 had itself claimed a refund of Rs. 11,40,97,349/-. It was pointed out that between the filing of the return for the said quarter initially on 09 May 2014 and the revised return on 31 March 2015, only two notices for default assessment pertaining to the period April 2012 to March 2013 had come to be issued. It was his submission, however, that since those had been questioned by filing objections before the OHA, the mere issuance of those notices could not have constituted a valid ground to deny refund as claimed by the petitioner and as it stood embedded in its return. Mr. Gulati pointed out that the period of two months as prescribed in Section 38(3)(a)(ii) of the DVAT Act had clearly expired on 31 May 2015 and undisputedly at least till that date no enforceable demand existed and which may have justified the respondents in withholding the amount as claimed to be refundable. 13. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line portal and additionally submitted physically before the respondents. The details as set out in that chart are extracted hereinbelow: - SR.NO. PERIOD ONLINE PHYSICAL FILING 1. Annual 2014-15 06.03.2019 P 40/pg. 345 08.03.2019 P41/Pg. 347 2. 1st Qtr 2015-16 24.12.2019 P42/Pg. 349 24.12.2019 P43/Pg. 357 3. 2nd Qtr 2015-16 4. 3rd Qtr 2015-16 5. 4th Qtr 2015-16 6. Annual 2015-16 22.04.2020 P44/Pg. 358 26.06.2020 P45/Pg. 360 7. 1st Qtr 2016-17 01.04.2021 P46/Pg. 378 05.04.2021 P47/Pg. 356 8. 2nd Qtr 2016-17 9. 3rd Qtr 2016-17 10. 4th Qtr 2016-17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn in which the refund has been claimed for scrutiny, those steps are to be taken within the time frame envisaged under Section 38 of the DVAT Act; (3) even where the Department seeks to invoke Section 39 of the Act, that action again has to be taken within the time frame in Section 38(3) of the DVAT act. 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 creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication resulting in such unnecessary payment of interest beyond what is permissible. This is an additional reason why the Court refuses to countenance the socalled 'fail-safe' system devised by the Department for staggering the release of refund of payment once a refund application has been processed, verified and found to be in order. 21. It was then submitted that since the claim for refund stood raised and included in the return which was filed, there was no legal obligation placed upon the petitioner to separately move a Form DVAT-21. Mr. Gulati in support of the aforesaid submission relied upon the following passages from Commissioner of Trade and Taxes v. Corsan Corviam Construction S.A.-Sadbhav Engineering Ltd. JV 2023 SCC OnLine Del 1900:- 36. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts of this case, we are unable to accept that the petitioner can be denied interest on the amount of refund which has been unjustifiably withheld, mainly for two reasons. First, that there is no dispute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same. The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long. 23. Seeking to buttress the challenge which was raised in the backdrop of Section 35(2) of the DVAT Act and the submission that once a demand comes to be challenged before the OHA, no adjustment can be made under Section 38(2), Mr. Gulati referred to the following observations as rendered in Bhupindra Auto International v. Commissioner, Trade Taxes Anr. Order dated 10.11.2016 passed in W.P.(C) 9521/2016. The petitioner had claimed a direction for refund of excess VAT amounts for certain previous periods. This Court had issued not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event the 90 days elapse. In this case, the judgment of the Court was delivered on 14.05.2015 and the petitioner approached the Sales Tax Department on 22.07.2015 and 20.11.2015. The Delhi Sales Tax authority's appeal by way of special leave before the Supreme Court was disposed of on 28.11.2016. In this background, the Revenue's burden of the song as it were is that since the 21 form was only filed on 25.05.2018 (as without prejudice measure) by virtue of this Court's order dated 09.05.2018, the interest on the refund can be granted having regard to the express provisions of Section 30 of Delhi Sales Tax Act with reference to the date concerned, i.e. 25.05.2018. The Revenue's contention, in this Court's opinion, is untenable. The judgment in Suvidhe (supra) emphasized - although in the context of Section 11B (of the Central Excise Act) where the assessee had to approach and make a predeposit to the appellate authority-that such deposit sums would not amount to depositing or paying excise duty but rather to avail remedy of an appeal. The Bombay High Court observed as follows in Suvidhe Ltd. v. UOI 1996 (82) ELT 177 (Bom): 1. Rule. By consent rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: 42. To the same effect, the Division Bench of the Delhi High Court in Voltas Limited v. Union of India [1999 (112) ELT 34 (Delhi)], also held that the pre-deposit under Section 35F of the Act is a deposit pending appeal and it is not available for appropriation or disbursal by the Revenue Department. Paragraph-7 of the said judgment is also quoted below for ready reference: 7. It cannot be denied that the demand against the petitioner was raised consequent to the order of adjudication. Section 35F of the Act under which the petitioner was required to deposit the amount of Rs. 50 lakhs speaks of deposit pending appeal. It is clear that the amount so deposited remains a deposit pending appeal and is thereafter available for appropriation or disbursal consistently with the final order maintaining or setting aside the order of adjudication. 43. The learned Single Judge of the Kerala High Court in Alwaye Sugar Agency v. Commercial Tax Officer, Alwaye 2011 (42) VST 517 also dealt with a similar controversy as is involved in the present case and under the provision of Amnesty Scheme announced in Kerala in the Budget Speech of 2010, the learned Single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulable from the date when its appeal was allowed by this Court by order dated 14.05.2015. The respondents shall ensure that the amounts are processed and credited to the petitioner's account within four weeks. The petition is allowed in these terms. 25. It was further pointed out that the principles laid down in MRF Ltd. were again reiterated in Rakesh Kumar Garg Ors. v. The Deputy Commissioner of Central Excise, Division - I Ors. Order dated 26.09.2018 passed in W.P.(C) 11757/2016 where the Court had held as under: - 3. The two-fold submissions have been made on behalf of the petitioners. Firstly, that the amounts paid as pre-deposit (before CESTAT) and pursuant to the directions of this court, while pursuing the appeals under Section 35G, did not bear the character of tax and consequently, when relief was finally granted, interest had to be paid from the date of deposit. The other submission is that if the amended Section 35FF (i.e. amended w.e.f. 06.08.2014) were to be treated as prospective, it would be arbitrary as it would deny the benefit of interest upon amounts which never bore the character of tax. 4. This court is of the opinion that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to pursue an appeal. xxx xxx xxx 13. As is manifest from a clear reading of sub-section (1), the said provision relates to a claim made by a person for refund of an amount of tax paid by him. The express language as employed in Section 30(1) itself takes the case of refund of pre-deposit out from the rigors of the procedural formalities which are contemplated therein. We further note that as in the present case, claims for refund which may arise as a consequence of an order passed by the Appellate Authority or a Court would be governed by Section 30(4) of the Act. xxx xxx xxx 15. In our considered opinion a pre-deposit would become refundable the moment an Appellate Authority comes to hold in favour of the assessee and demands come to be annulled. This principally since pre-deposit is not tax or duty and the refund of which alone is regulated by Section 30(1) of the Act. We note that the decision of the Bombay High Court in Suvidhe Limited was assailed before the Supreme Court. While dismissing the appeal of the Union, the Supreme Court in Union of India Vs. Suvidhe Limited (2016) 11 SCC 808 held as follows:- 3. The show-cause notice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhe Ltd. v. Union of India [Suvidhe Ltd. v. Union of India, (1996) 82 ELT 177 (Bom)]. Since the special leave petition was dismissed in limine, we would like to reproduce para 2 of the judgment of the High Court wherein the High Court had observed that in case of such deposits, provisions of Section 11-B of the Customs Act (sic Central Excise Act, 1944) will have no application. This para reads as under: ( Suvidhe Ltd. case [Suvidhe Ltd. v. Union of India, (1996) 82 ELT 177 (Bom)], ELT p. 178) 2. Show-cause notice issued by the Superintendent (Tech.) Central Excise to the petitioner to show cause why the refund claim for excise duty and redemption fine paid in a sum of Rs 14,07,410 should be denied under Section 11-B of the Central Excise Rules and Act, 1944 (sic) is impugned in the present petition. The aforesaid amount is deposited by the petitioners not towards excise duty but by way of deposit under Section 35-F for availing the remedy of an appeal. Appeal of the petitioners has been allowed by the Appellate Tribunal by its judgment and order passed on 30-11-1993 with consequential relief. The petitioners' prayer for refund of the amount deposited under Section 35-F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, certain other demands had come to be raised against the petitioner and consequently the respondents were clearly justified in adjusting the refunds claimed against those demands. It was his submission that the refunds which were claimed by the petitioner were adjusted against tax demands of Rs. 23,50,50,928/- which existed as on 06 May 2022 and thus the respondents were clearly justified in proceeding further in accordance with Section 38(2) of the DVAT Act. 29. It was further submitted that the allegation of a technical fault existing on the portal of the respondents is bereft of any material particulars and cannot be countenanced. Our attention was then drawn to the averments made in paragraph 22 of the counter affidavit and which had referred to discrepancies in the form which was submitted by the petitioner as well as its failure to update material particulars on the official portal. 30. We further note that pursuant to the liberty accorded by us on 28 July 2023, the respondents have tendered a further affidavit dated 04 August 2023 dealing with the various objections which are stated to have been filed before the OHA by the petitioner. The subsequent affidavit filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 08.11.2016 Demand as per OHA's Order dated 31.10.2019 Demand on allowance of rectification applications Particulars Assessed Interest Penalty Total Demand Tax Interest Tax Interest Total Refund Refund claimed in Return dated 31.03.2015 11,40,97,349 VAT Orders FY 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,966 5,08,972 5,08,972 February 4,42,248 3,08,786 4,42,248 11,93,282 4,42,248 4,42,248 March 29,89,791 20,49,440 29,89,791 80,29,022 29,89,791 29,89,791 1,78,58,003 1,34,93,462 1,78,58,003 4,92,09,468 1,78,58,003 15,00,000 1,78,58,003 1,14,375 (1,79,72,378) CST Orders FY 2012-13 January 86,301 74,479 86,301 2,47,081 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ist Qtr. 3,17,968 2,05,155 - 5,23,123 2nd Qtr. 5,37,830 3,26,977 - 8,64,507 3rd Qtr. 4,23,658 2,41,311 - 6,64,969 4th Qtr. 32,45,566 17,28,598 - 49,74,164 70,26,763 70,26,763 (70,26,763) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose pertaining to FY 2015-2016 and the first quarter of FY 20172018. However, the claim for refund which is made in the instant writ petition, undisputedly, relates to and emanates from the return which was submitted for the quarter ending 31 March 2014. Undisputedly all objections which pertained to FY 2012-13 as well as the period for April 2013 to December 2013 had been duly considered and ultimately disposed of by the respondents themselves in terms of the order of the OHA dated 31 October 2019. 35. The factual dispute therefore which is sought to be raised and which relates to the various objections filed for the other quarters is clearly of little significance. As would be manifest from a consideration of Section 38 of the DVAT Act, the claim for refund is to be considered in light of the plain language employed in that provision and principally sub-section (2) thereof which enables the Commissioner to adjust any amount which becomes refundable against tax dues that may exist. Section 38 of the DVAT Act reads as follows:- 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided in rule 34. 37. We are at the outset constrained to observe that as would be evident from a bare perusal of Rule 34, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself. This clearly emerges from Rule 34(1) which uses the expression except claimed in the return . The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam and Consortium of Sudhir Power Projects. 38. The failure of the respondents to refund the amount of pre-deposit and even adjusting the sum of Rs. 1,00,00,000/- deposited in that respect on 16 November 2015 is also clearly arbitrary and untenable. Our Court has consistently taken the position that a pre-deposit does not partake the character of a tax or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s long as objections remain pending with the OHA, any amount claimed by the respondents would clearly not answer the description of an amount due or payable as contemplated under Section 38(2). This is also evident from the exposition of the legal position in Bhupendra Auto International. 43. Insofar as this aspect is concerned, the respondents could not have justifiably harbored even a vestige of a doubt in light of their own Circular date 10 August 2011 which is reproduced hereinbelow: - GOVERNMENT OF NCT OF DELHI DEPARTMENT OF TRADE AND TAXES (POLICY BRANCH) VYAPAR BHAWAN, I.P. ESTATE, NEW DELHI-110002 F.No.6(87)/Policy/VAT/2011/440-445 Dated: 10.08.2011 CIRCULAR NO. 6 OF 2011-12 Subject: Disposal of objections filed under Section 74 of DVAT Act, 2004 On filing the objections against the notice of demand/assessment, the demand so created under assessment or otherwise get stayed by virtue of Section 35(2) of DVAT Act, 2004, and demand gets locked up till the disposal of the objections. In order to safeguard the interest of revenue and dealers, the Commissioner (VAT) has advised that the objection Hearing Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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