2016 (6) TMI 188 - HC - VAT and Sales Tax

Seeking refund of outstanding amount of tax credit - Refund application was already rejected by the respondents many a times even after the directions provided by the Court for refund of tax credit - Held that - considering that there has been an abject failure by the Respondents to comply with the statutory mandate of Section 38 of the DVAT Act the Court sees no purpose being served in the Petitioners at this stage producing records of over ten years from 1st April 2005 till 21st January 2016. Since the Respondents in any event do not have the records it will not be possible for them to verify the correctness of the records to be produced by the Petitioners. Also the stage for the Department to now question the correctness of the self assessment return filed by the Petitioner No.1 way back on 30th October 2007 for the year 2006-07 has long been crossed. There is no possibility of the said assessment being reopened. The carry forward of the refund amount in the succeeding returns up to 2012 was also never questioned by the Respondents. In the circumstances the production of records at this stage by the Petitioner No. 1 will only delay the refund further. Considering the number of times the Petitioners have had to approach this Court the request of counsel for the Respondents for yet another opportunity to consider afresh the issue of refund due to Petitioner No. 1 is not justified. The whole object of stipulating a time schedule under Section 38 of the DVAT Act for processing refunds will be defeated if any further indulgence is shown to the Respondents. Therefore the Respondents are directed to issue in favour of Petitioner No. 1 the refund order in the sum of 34, 62, 662 together with 6% interest per annum from 20th February 2015 till the date of its payment which shall not be not later than 31st May 2016. - Decided in favour of petitioner

Summary

Issues:
Challenge to rejection of refund application by Assistant Commissioner, Ward-16.

Analysis:
The petition challenges the rejection of a refund application by the Assistant Commissioner, Ward-16, through a letter dated 29th June, 2015. The petitioner, a proprietory concern registered with VAT Authorities in 2004, sought a refund of ?34,62,662 outstanding since 1st April, 2005. The petitioner had a history of carrying forward tax credit amounts as per assessment orders. Despite objections and restoration of registration in 2014, the refund application was rejected multiple times, leading to court interventions.

The court noted that the rejection of the refund application was not based on the unavailability of records but on grounds like lack of continuity in carried forward amounts. The respondents failed to comply with the statutory mandate of processing the refund application within the stipulated time frame. The court found the subsequent default assessments of tax, interest, and penalty to be arbitrary and unsustainable in law. The respondents' request for the petitioner to produce records dating back to 2005 was deemed unreasonable given the circumstances.

Considering the prolonged legal battle and the failure of the respondents to adhere to statutory timelines, the court set aside the rejection of the refund application and directed the respondents to issue the refund of ?34,62,662 with 6% interest per annum by 31st May, 2016. The court warned the concerned officers of legal consequences if the order was not complied with by the specified date. The case was listed for further proceedings on 2nd June 2016, with a provision for personal appearance of the officers if the refund was not issued as directed.

In conclusion, the judgment highlighted the importance of timely processing of refund applications, criticized the arbitrary actions of the respondents, and emphasized the need for compliance with court orders to ensure justice for the petitioners.