2015 (2) TMI 926 - HC - VAT and Sales Tax

Denial of balance 10% refund claim - 90% of provisional refund already granted - Petitioner did not apply for balance disbursement - Bar of limitation - Held that - As such, when the refund to the extent of 90% was already made as a provisional refund and 10% was to be refunded at the later stage, there is no question of expiry of the period of the assessment as sought to be canvassed. In normal circumstances, as per section 38 of the Gujarat Value Added Tax Act, the refund is required to be made with interest at the rate of 6% p.a. However, Mr. Kaji, learned counsel appearing for the petitioner under the instruction of his client declared before the Court that if the petitioner is permitted to adjust the amount payable by way of refund of ₹ 1,04,118/towards future tax liability, his client would not claim for interest and the same would satisfy his client. - in view of the declaration made by the petitioner himself, the matter can be put to rest, but suffice it to observe that once the refund in part is made, the refund for the balance amount is required to be made and there is no question of applying limitation as sought to be canvassed on behalf of the respondent. Interest not awarded in view of declaration made by the petitioner - Decided in favour of assessee.

Summary

Issues:
1. Provisional refund made for assessment year 2007-2008.
2. Denial of refund by respondent due to time limit expiry.
3. Petitioner's application for refund and objection filed.
4. Petitioner's request to adjust refund towards future tax liability.
5. Court's decision on the matter.

Analysis:

1. The case involves a provisional refund made for the assessment year 2007-2008, where 90% of the amount was refunded initially, leaving a balance of 10% unpaid. The petitioner did not apply for the disbursement of the balance amount, expecting to receive it in due course. However, upon no refund being disbursed later, the petitioner applied for the refund in 2014, leading to the present petition before the Court.

2. The respondent denied the refund on the grounds of the time limit being over, despite the petitioner's objection. The Court noted that once a refund in part is made, the refund for the balance amount is required to be issued without applying any limitation as argued by the respondent. The petitioner sought relief from the Court in adjusting the unpaid refund towards future tax liability, thereby waiving any interest on the refund.

3. The Court considered the arguments presented by both sides, where the petitioner's counsel declared that if the adjustment towards future tax liability is permitted, the petitioner would not claim interest on the refund. The respondent, represented by the learned AGP, agreed that granting relief for adjustment would not be against the interest of the revenue since the petitioner waived the interest on the refund.

4. Consequently, the Court directed the respondent to refund the balance amount by adjusting it towards the petitioner's future tax liability. The Court emphasized that once a partial refund is made, the remaining amount must be refunded without any limitation. Due to the petitioner's declaration, interest on the refund was not awarded, and the petition was allowed accordingly, with no order as to costs.

5. In conclusion, the Court's decision to allow the adjustment of the unpaid refund towards future tax liability, without imposing any time limit for the refund, resolved the matter satisfactorily based on the petitioner's declaration and the respondent's agreement. The judgment ensured fairness and compliance with the applicable tax laws in the case of the provisional refund for the assessment year 2007-2008.