2016 (7) TMI 286 - HC - VAT and Sales Tax

Refund due to opting composition scheme for works contract - department treated the same as Refund of input tax credit - business of civil construction work. - refund was not released on the premise that the same would be carried forward in the next year and would be adjusted towards the petitioner s tax liability. - Gujarat Value Added Tax Act - Held that - These refunds were released by the Assessing Officer while passing order of assessment for the assessment year 2008-09. Simply because such assessment orders are computer generated and would have specific boxes containing specific details and which did not have any entry for refund for past assessment years, he was compelled to show the sum of ₹ 35,13,883/- against the entry of net tax credit. This method adopted by the Assessing Officer would not change the true character of the said sum payable to the petitioner. It was and remained a refund due and payable. The Deputy Commissioner of Commercial Tax committed a serious error in treating such refund as input tax credit claimed by the petitioner. It is true that the petitioner has opted for composition of tax and, in such situation, would not be entitled to claim any input tax credit. The Deputy Commissioner cannot disturb the refund payable to the petitioner on mere suspicion. - The authority shall hear the petitioner s appeal against short refund and short interest and dispose of the same in accordance with law. - Decided in favor of assessee.

Summary

Issues:
1. Refund claim under the Gujarat Value Added Tax Act for assessment years 2006-07 and 2007-08 not granted.
2. Assessing Officer treating the refund as input tax credit in the assessment order for the year 2008-09.
3. Impugned notice issued seeking to revise the assessment order of 2008-09 and deny the refund.
4. Allegation of serious error by the Deputy Commissioner in treating the refund as input tax credit.
5. Respondent raising issues of ambiguity in input tax credit derived from returns and short levy of tax for the assessment year 2008-09.

Analysis:

1. The petitioner, a private limited company engaged in civil construction work, filed for a refund under the Gujarat Value Added Tax Act for the assessment years 2006-07 and 2007-08. Despite the assessments becoming time-barred, the refunds were not released. The High Court directed the release of refunds, which were then granted by the Assessing Officer in the assessment order for the year 2008-09. However, the petitioner was not fully satisfied as a portion of the refund remained unpaid, leading to an appeal. The Commissioner issued a notice seeking to revise the assessment order of 2008-09, denying the refund, alleging that the petitioner was not entitled to input tax credit due to being under the composition tax regime.

2. The petitioner argued that the Assessing Officer erroneously treated the refund as input tax credit in the assessment order for the year 2008-09. The petitioner clarified that the sum shown as refund was not claimed as tax credit and was only indicated as such due to system constraints. The petitioner's additional affidavit further emphasized that the refund was due for excess taxes paid in previous years and should not be considered as input tax credit. The Deputy Commissioner's error in treating the refund as input tax credit was highlighted, emphasizing that the basis for denying the refund was unfounded.

3. The impugned notice issued by the Deputy Commissioner seeking to revise the assessment order of 2008-09 and deny the refund was challenged by the petitioner. The court found that the Assessing Officer's method of showing the refund as input tax credit did not change the nature of the sum payable to the petitioner. The court concluded that the notice was unjustified and ordered it to be quashed, directing the authority to address the petitioner's appeal for the remaining refund and interest.

4. The respondent raised issues of ambiguity in the input tax credit derived from the petitioner's returns for the assessment years 2006-07 and 2007-08. Additionally, concerns were raised regarding a short levy of tax for the assessment year 2008-09. The court noted that these issues did not warrant disturbing the refund already released to the petitioner. The court emphasized that the assessments for the earlier years were time-barred and not subject to revision, and any potential revisions for the assessment year 2008-09 should follow due process without affecting the refunds already granted.

5. In conclusion, the court set aside the impugned notice and instructed the authority to address the petitioner's appeal for the remaining refund and interest in accordance with the law. The judgment highlighted the importance of distinguishing between refunds and input tax credits and ensuring that assessments and revisions are conducted following proper procedures without jeopardizing rightful refunds.