2012 (3) TMI 373 - HC - VAT and Sales Tax

Revised demand notice/refund order - Held that - Once the tax is paid under the Act, the assessee is entitled to the benefit of input tax. The delay in putting forth the claim for refund does not in any way affect his right to claim the said amount, which is legitimately due to him under Act nor it amounts to contravention and resulting in liability to pay tax, interest and penalty as sought to be levied by the assessing authority. The assessee paid four per cent tax demanded by the supplier in the month of June, July and December of 2005 and February 2006. When the actual tax payable was 12.5 per cent, the supplier raised a debit note on July 31, 2006. It is also not in dispute that promptly the assessee has paid the difference in tax, i.e., he paid the difference of tax in July 2006. It is also not in dispute that the supplier who received the same has remitted the same to the Department in July 2006. Therefore, the assessee was entitled to claim refund of input tax in July 2006. However, he has put forth the claim six months, thereafter. As rightly pointed out by the Tribunal, if he had put forth the claim in July 2006, the amount due to the assessee by way of refund was ₹ 1,36,837. Because the claim was made in December 2006, the amount due to him is ₹ 1,04,375. The Tribunal was justified in interfering with the said order and allowing refund of input tax to the assessee to which he is legitimately entitled to under the Act. In favour of assessee.

Summary

Issues:
1. Claim for input tax rebate in VAT return
2. Timing of claiming refund of input tax
3. Interpretation of section 30(3) of the Act

Analysis:
1. Claim for input tax rebate in VAT return:
The case involved a dispute regarding the timing of claiming input tax rebate in the VAT return. The assessee had purchased chemicals at a lower tax rate but later faced a higher tax liability. The Tribunal held that the assessing authority had denied legitimate relief to the assessee by not allowing the input tax rebate for the correct tax period. The Tribunal emphasized the need for separate orders for each tax period and highlighted the excess tax paid by the assessee, which was refundable. Ultimately, the Tribunal set aside the tax, penalty, and interest levied for December 2006, as the input tax rebate should have been allowed in the appropriate tax period.

2. Timing of claiming refund of input tax:
The key contention was whether the assessee was entitled to claim a refund of input tax in December 2006, despite the debit note being raised in July 2006. The Government Advocate argued that the refund should have been claimed in July 2006 when the tax difference was paid. However, the counsel for the assessee relied on section 30(3) of the Act, stating that it does not mandate immediate refund claims. The High Court clarified that once tax is paid, the assessee is entitled to the benefit of input tax and can claim a refund later. The delay in claiming the refund does not affect the right of the assessee to receive the amount due under the Act.

3. Interpretation of section 30(3) of the Act:
The High Court analyzed section 30(3) of the Act, emphasizing that it pertains to the timing of tax payments and does not restrict the assessee's right to claim a refund of input tax. The Court criticized the assessing authority and the first appellate authority for misinterpreting the law and imposing tax, interest, and penalty incorrectly. The Court upheld the Tribunal's decision to allow the refund of input tax to the assessee, stating that the approach of the authorities was contrary to the law and the spirit of the Act.

In conclusion, the High Court dismissed the appeal by the Revenue, affirming the Tribunal's decision to grant the input tax refund to the assessee. The judgment highlighted the importance of following the correct tax periods for claiming rebates and upheld the assessee's right to receive the legitimate refund under the law.