2017 (1) TMI 1168 - HC - VAT and Sales Tax

Refund claim - Section 38(7)(d) - Section 38(3) - processing of VAT refund claims - furnishing of particulars and details relating to refund - Held that - even though the amendment to Section 38(7) was made in June 2012, within three weeks, a statutory notification followed by circulars was issued advising all dealers to furnish requisite details online and to not file the original copies of the declarations. The language of Section 38(7)(d) nowhere specifies that actual physical or hard copy of the original certificate is required. Moreover, the necessary form, i.e. Form-9 elicits exhaustive details in respect of CST and concessional duties with regard to receipt and pendency of declarations in Form E1, E2, F, H etc. Each of these relate to specific quarters for all the previous four years and are to be furnished by the dealers. Such being the case, the Revenue s contention that the mandate of Sections 11(2) of the DVAT Act and Rule 12 of the CST Rules, overriding all other concerns and suspending as it were, the obligation to frame the assessments and process refunds within the timeframe prescribed under Section 38(3) is misplaced and rejected as unacceptable. There is nothing in the language of these provisions compelling the dealers to provide original certificates in the physical format. Interest for delay in filing documents as required - Held that - for the period beyond what is stipulated u/s 38(3), the Revenue would be under an obligation to pay interest till the point of time the refund claim is adjudicated and allowed. If, for any reason, during the processing of the refund claim (but after the two month period), the assessee is called upon to furnish particulars relating to any inter-state transactions for the purposes of verification of any of the central forms, that time would stand excluded. A direction is issued to the respondents to process all the pending refund claims of the petitioners in respect of the documents by calling specific details within reasonable time - The respondents/DVAT shall ensure that the dealers shall also be entitled to applicable interest in accordance with law up to the date of payment - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Obligation of DVAT authorities to process refund claims.
2. Impact of Section 38(7)(d) of the DVAT Act on the obligation to process refund claims.
3. Interaction between DVAT and CST provisions regarding refund claims.
4. Requirement of furnishing statutory forms under CST for processing DVAT refunds.
5. Calculation of interest on delayed refunds.

Detailed Analysis:

1. Obligation of DVAT Authorities to Process Refund Claims:
The petitioners sought directions for their refund claims under the Delhi Value Added Tax (DVAT) Act to be processed and disbursed promptly. The court referenced two prior decisions, Swarn Darshan Impex (P) Ltd v Commissioner, Value Added Tax and Prime Papers & Packers vs Commissioner of VAT & Anr., which emphasized the mandatory nature of the timelines for processing refund claims under Section 38(3) of the DVAT Act. The court reiterated that refunds must be processed within one month for monthly returns and two months for quarterly returns, as stipulated by Section 38(3).

2. Impact of Section 38(7)(d) of the DVAT Act on the Obligation to Process Refund Claims:
The respondents argued that the obligation to process refunds is contingent upon the dealer furnishing all necessary documents, including those under the Central Sales Tax (CST) regime, as per the amendment introduced in 2012 under Section 38(7)(d). However, the court held that Section 38(7)(d) does not suspend the time-frame for processing refunds under Section 38(3). The court noted that the legislative intent behind Section 38(3) remains that refunds must be processed within the stipulated time, and the introduction of Section 38(7)(d) does not alter this obligation.

3. Interaction between DVAT and CST Provisions Regarding Refund Claims:
The court examined the relationship between the DVAT and CST provisions, particularly the requirement to furnish statutory forms under the CST Act. It was argued that the DVAT Act, enacted under the State List, and the CST Act, under the Union List, operate in distinct fields. The court emphasized that while the CST Act governs inter-State transactions, the DVAT Act applies to intra-State sales. The court concluded that the mechanisms for assessments, adjudication, and enforcement under the DVAT Act also apply to CST transactions, and the refund process under DVAT should not be delayed due to pending CST forms.

4. Requirement of Furnishing Statutory Forms under CST for Processing DVAT Refunds:
The court clarified that the requirement to furnish statutory forms under the CST Act does not necessitate the submission of original physical forms. The amendment to Rule 4 of the Central Sales Tax (Delhi) Rules and the introduction of Form-9 (Reconciliation Form) allow for the online submission of details. The court noted that the DVAT authorities had issued circulars and notifications advising dealers to furnish requisite details online, negating the need for physical forms. The court held that the time taken to furnish these forms should not suspend the obligation to process refunds within the prescribed time-frame under Section 38(3).

5. Calculation of Interest on Delayed Refunds:
The court reiterated that the DVAT authorities are obligated to pay interest on delayed refunds beyond the stipulated period under Section 38(3). The interest calculation should exclude only the time taken by the dealer beyond the specified period to furnish the required details. The court provided specific scenarios to illustrate how the interest calculation should be adjusted based on the time taken to provide the necessary documents. The court directed the respondents to process all pending refund claims promptly and ensure the payment of applicable interest in accordance with the law.

Conclusion:
The court held that the DVAT authorities must process refund claims within the time-frame stipulated under Section 38(3) of the DVAT Act, regardless of the requirement to furnish CST forms. The introduction of Section 38(7)(d) does not alter this obligation. The court directed the respondents to process all pending refund claims within four weeks and ensure the payment of applicable interest.

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