2014 (9) TMI 721 - HC - VAT and Sales Tax

Refund of excess tax - export of goods - Karnataka Value Added Tax Act, 2003 - petitioner has effected exports to an extent of nearly 95% of the goods manufactured by it - Held that - On perusal of the endorsement dated 06.11.2013, it is noted that the reason for refusing to refund the excess input tax is that the assessment for the year 2012-13 would have to be audited. It is only after the audit of the said accounts that the excess tax paid could be refunded. The reason given for the refusal of refund of the excess tax paid by the assessee in my view, is not in consonance with the Rules. The quantum of tax to be refunded is also an admitted fact as well as the eligibility of the petitioner to receive refund - impugned endorsement is contrary to Rule 126 of the Rules and therefore, it is quashed - Decided in favour of assessee.

Summary

Issues:
Refund of excess tax paid by a 100% export-oriented unit under the Karnataka Value Added Tax Act, 2003 for the assessment period 2012-13.

Analysis:
The petitioner, engaged in manufacturing designer wax candles as a 100% export-oriented unit, contested an endorsement issued by the respondent-department regarding the refund of excess tax paid during the assessment period 2012-13. The petitioner claimed that it had paid excess tax amounting to Rs. 1,29,11,119 and sought a refund under Rules 127 and 128 of the Karnataka Value Added Tax Rules 2005. The petitioner argued that as an export-oriented unit, it was not liable to pay tax on goods exported, and the excess tax paid should be refunded. The respondent-department had acknowledged the eligibility of the petitioner for a refund, but the endorsement cited the need for an audit of the accounts before refunding the excess tax.

The High Court examined the petitioner's contention that the endorsement refusing the refund was contrary to Rule 128 of the Rules. The court noted that the reason given for withholding the refund until the audit of accounts was completed did not align with the Rules. It was emphasized that the quantum of tax to be refunded and the petitioner's eligibility were undisputed facts. Consequently, the court held that the endorsement was inconsistent with Rule 126 of the Rules and quashed it.

The court directed the respondent-department to refund the excess input tax paid by the petitioner within three weeks of receiving a certified copy of the order. The petitioner was granted liberty to claim interest on the delayed refund. The legal representatives of both parties agreed to follow the court's directives for the actual refund process. The writ petitions were disposed of accordingly.