2015 (12) TMI 1196 - HC - VAT and Sales Tax

Demand of interest u/s 32 - Refund of excess tax - Delay in sanction of refund claim - Held that - Petitioner had raised a claim for refund for the year 20082009, in respect of which the return was filed on 30.04.2010, which is not in dispute. Having filed return for the year 200809, he filed an application for refund on 11.06.2010 i.e. after almost 1 months. - Once the application was filed on 11.06.2010, the provision of Section 51 of the Act before amendment, stood attracted - by amendment to Section 51 by Maharashtra Act No. 15 of 2011 w.e.f. 01.05.2011, words within one month of the receipt of the application have been substituted. - present case, was made on 11.06.2010 for refund and the Commissioner, within one month of receipt of the application, could have called for such additional information from the dealer as he may think fit. In the present case, admittedly, additional information was called by the Commissioner after 9 months of the receipt of the application, which could not have been done after the expiry of one month. Order of refund was made on 16.12.2012 i.e. after more than three years, for which there is absolutely no explanation and for which the dealer cannot be held guilty for non payment. - concerned Commissioner was at fault in not adhering to the limitation provided by law. It is because of the late making of the order by the concerned Commissioner, the litigation has arisen and, therefore, it would be appropriate for the Government to find out the concerned officer/ Commissioner who has failed in his legal/statutory duty to act according to the provisions of law and proceed against him in accordance with law. By not making refund within time limit prescribed by law i.e. within three months, the Refund Officer has violated law and, therefore, when the department itself made the direct credit as late as on 28.03.2013, the present officer has treated him as defaulter within the meaning of section 30 (2) forgetting that the Refund Officer had himself violated the law. Thus, the Refund Officer as well the concerned Assistant Commissioner both have put the petitioner to a double whammy. It is preposterous, in our opinion, and a retrograde step. In our opinion, section 30 (2), therefore, will have no application in the present case. The petitioner cannot be blamed for not making payment and it is the concerned officer, who did not pass order within three months and created the entire chaos. Thus we hold that the respondent-concerned Assistant Commissioner, Sales Tax, who has issued demand notice is deemed to be aware of this factual and legal position since the order of refund was communicated to him and the petitioner is not at fault since the refund officer himself did not act according to law. Without thinking so, the Assistant Commissioner, issued the demand notice which, in our opinion, is a reckless act. - Decided in favour of assessee.

Issues Involved:
1. Validity of the demand notice for interest under Section 32 of the Maharashtra Value Added Tax Act, 2002.
2. Compliance with Section 51 of the Maharashtra Value Added Tax Act, 2002 regarding the refund process.
3. Applicability of Section 50 of the Maharashtra Value Added Tax Act, 2002 concerning refund adjustments.
4. Application of Section 30(2) of the Maharashtra Value Added Tax Act, 2002 for interest on delayed tax payments.
5. Accountability and responsibility of the Commissioner and Assistant Commissioner in processing refunds and issuing demand notices.

Detailed Analysis:

1. Validity of the Demand Notice for Interest:
The petitioner, a coal dealer, challenged the demand notice dated 16.08.2013, which required the payment of interest amounting to Rs. 22,02,221 under Section 32 of the Maharashtra Value Added Tax Act, 2002, for the period from 01.04.2009 to 31.03.2010. The demand was based on the premise that the petitioner defaulted in making tax payments.

2. Compliance with Section 51 of the Act:
The petitioner filed a Value Added Tax (VAT) audited report claiming a refund of Rs. 41,34,650 on 30.04.2010 and subsequently applied for a refund on 11.06.2010. Section 51 of the Act, prior to its amendment effective from 01.05.2011, required the Commissioner to call for additional information within one month of receiving the application and to decide the refund claim within three months. The Commissioner, however, called for additional information after nine months, which was not legally permissible. Consequently, the refund order was delayed until 16.12.2012, with the adjustment made on 21.03.2013.

3. Applicability of Section 50 of the Act:
Section 50 allows for the refund of excess payments or adjustments. The petitioner argued that the refund amount of Rs. 41,34,650, which was with the department, should have been adjusted as per Section 50. The delay in processing the refund was attributed to the department's failure to adhere to the statutory timeline, not the petitioner's fault.

4. Application of Section 30(2) of the Act:
Section 30(2) imposes interest on registered dealers who fail to pay taxes within the specified time. The Assistant Commissioner treated the petitioner as a defaulter for the year 2009-2010, despite the delay being on the part of the department. The court found that the petitioner could not be deemed a defaulter since the refund was not processed within the legally prescribed period. The department's failure to act within the stipulated time frame led to the wrongful demand for interest.

5. Accountability and Responsibility:
The court held that the Commissioner was at fault for not adhering to the statutory deadline, causing the delay in the refund process. The Assistant Commissioner's issuance of the demand notice was deemed reckless, as it failed to consider the department's own delay. The court suggested that the government identify and take action against the responsible officer for failing to fulfill their legal duties.

Conclusion:
The court quashed the demand notice for interest and directed the respondents to pay costs of Rs. 10,000 to the petitioner within four weeks, to be recovered from the officer at fault. The petitioner was not held responsible for the delay in the refund process, and the department's failure to comply with statutory provisions was acknowledged.

Order:
(i) Rule is made absolute in terms of prayer clause (A).
(ii) The prayer made in prayer clause (b) is rejected.
(iii) Respondents shall pay costs of Rs. 10,000 to the petitioner within four weeks, recoverable from the concerned officer at fault.

← Previous Next →