2015 (3) TMI 556 - HC - VAT and Sales Tax

Refund claim - Benefit of provisions governing set off contained in Section 48(6) of the Maharashtra Value Added Tax Act, 2002 - Held that - The provisions of Section 48 deals with set off, refund etc. Section 49 is on refund of tax on declared goods sold in the course of interstate trade or commerce and, therefore, not relevant here. Section 50 deals with refund of excess payment. Subsection (2) thereof enables dealer to adjust such refund against the amount due as per any return for any period contained in the said year. However, it is not necessary for us to consider the question of refund of excess payment in present facts. Subsection (6) of Section 48 states that where any dealer becomes entitled to refund after the appointed date, whether under any earlier law or under this Act, i.e. under 2002 Act mentioned supra, then such refund must be first applied against the amount payable under any earlier law or 2002 Act. If any balance amount is left, that amount can only be refunded to dealer. Thus, Section 48(6) of the 2002 Act, casts obligation upon the respondents to appropriate the excess amount paid by the dealer in any previous year towards its demand in subsequent year. This obligation imposed by Section 48(6) is being violated in present matters. It is apparent from the facts that though assessment for the year 2008-09 has been finalized and demand has been made, assessment for the earlier year i.e. 2007-08 is still pending. There is no obvious reason for keeping it pending. This conduct defeats legislative intent behind incorporating Section 48(6) in statute and denies advantage of a beneficial provision meant for assessee to it. - The amount found refundable to the petitioners shall then be appropriately dealt with in accordance with law under Section 48(6) noted supra. The consequences of such appropriation can be examined in appeals which are preferred by the petitioners challenging subsequent levy of tax, interest and penalty for the year 2008-09. - Decided in favour of assessee.

Summary

Issues:
Non-assessment of Value Added Tax for the period from 01.04.2007 to 31.03.2008, Claim of benefit of set off under Section 48(6) of the Maharashtra Value Added Tax Act, 2002, Dispute regarding refund amount, Levy of interest and penalty, Compliance with Section 48(6) in appropriation of excess amount paid.

Analysis:
The petitioners approached the Bombay High Court regarding the non-assessment of Value Added Tax for a specific period and claimed the benefit of set off under Section 48(6) of the Maharashtra Value Added Tax Act, 2002. They argued that the exact refund amount for the period in question had not been finalized, hindering their ability to claim set off against a later tax demand. The petitioners contended that if the set off was allowed, it could potentially extinguish their tax liability and negate any interest or penalty charges. They had also filed appeals challenging the subsequent tax assessment, interest, and penalty. The court noted relevant judgments and legal provisions, emphasizing the obligation on the authorities to appropriate excess amounts paid in previous years towards demands in subsequent years as per Section 48(6) of the Act.

The Government Pleader sought time to finalize the assessment for the relevant year and referred to a Trade circular restricting the refund or set off facility to specific years. However, the court found that the delay in finalizing the assessment for the earlier year was unjustified and contrary to the legislative intent behind Section 48(6). In the interest of justice, the court directed the authorities to complete the assessment proceedings for the pending year within six weeks. The court ordered that any refundable amount to the petitioners should be appropriately handled in accordance with the law, specifically under Section 48(6). The implications of this appropriation could be examined in the appeals challenging the subsequent tax, interest, and penalty levies.

Ultimately, the court allowed the petitions, with no costs imposed, and kept the question of the consequences of the appropriation open for further consideration in the appeals. The judgment highlighted the importance of adhering to statutory provisions, ensuring the proper application of excess amounts paid by taxpayers, and upholding the rights of the petitioners in seeking appropriate remedies under the law.