2009 (6) TMI 947 - HC - VAT and Sales Tax

Whether the petitioner is liable to produce any further proof with respect to payment of input tax, for which refund is claimed? Held that - In this case it is evident that the dealer had produced bills with respect to purchases made by him, evidencing payment of input tax. Further he had produced copies of demand drafts evidencing payment of tax to various Forest Depots within the State. These documents will definitely prove the payment of input tax. Production of these documents can definitely be considered as discharge of the burden cast upon the dealer to prove his claim for refund. Therefore, the dealer had successfully discharged the burden of proving his entitlement for refund. The dealer cannot be burdened with production of any additional evidence. His initial burden of proving entitlement for refund should be presumed as discharged, on his production of materials which will clearly indicate payment of input tax. It is for the assessing authority to do any further cross-verification, for which the dealer could not be insisted for production of any additional proof or certificates. Thus the rejection of the claim for refund ordered through exhibit P4 is hereby quashed.

Summary

Issues:
Refund of excess input tax credit; Requirement of further proof for refund; Burden of proof on the dealer; Procedure for assessing authority to verify refund claim.

Refund of Excess Input Tax Credit:
The petitioner, a timber dealer, sought refund of excess input tax credit remaining unadjusted in his accounts for the year ending on March 31, 2006. The petitioner submitted a refund application supported by bills and copies of demand drafts as evidence of tax payments made to various Forest Department offices. The first respondent rejected the refund claim citing lack of details and requested tax remittance certificates from the Forest Department. The petitioner argued that as the Forest Department is a "dealer" under the Kerala Value Added Tax Act, the tax paid on purchases should be credited without the need for further certificates. The court examined the provisions of the Act and ruled that the petitioner had sufficiently proven entitlement to the refund, and the rejection was unjustified.

Requirement of Further Proof for Refund:
The assessing authority contended that the petitioner needed to provide tax remittance certificates from the Forest Department to confirm payments, which the petitioner argued was unnecessary due to the bills and demand drafts submitted. The court analyzed the relevant rules and held that the burden of proof to claim a refund lies with the dealer, which the petitioner had discharged by producing documents showing tax payments. The court emphasized that any further verification required is the duty of the assessing authority and not the dealer, and the rejection based on lack of additional proof was deemed unsustainable.

Burden of Proof on the Dealer:
The court clarified that the dealer's burden to prove entitlement for refund is met by producing evidence of tax payments, as seen in this case with bills and demand drafts. Once the dealer provides such materials, it is presumed that the burden has been discharged. The assessing authority is responsible for any necessary cross-verification to ensure the genuineness of the claim, and the dealer should not be compelled to provide additional evidence beyond what is initially required.

Procedure for Assessing Authority to Verify Refund Claim:
The court highlighted that the assessing authority must conduct any necessary enquiry to verify the refund claim's admissibility. This verification process should focus on cross-verifying the genuineness of the claim and supporting documents. The court ruled that the assessing authority cannot demand additional proof from the dealer if the initial burden of proof has been satisfied. The authority's duty is to conduct any required cross-verification without burdening the dealer with producing further evidence.

In conclusion, the court quashed the rejection of the refund claim and directed the assessing authority to reexamine the application based on the evidence provided by the petitioner. The authority was instructed to process the refund within three months from the date of the judgment.