2017 (5) TMI 1063 - HC - VAT and Sales Tax

Refund claim - denial of input tax credit - Section 9(2) (g) of the DVAT Act - Held that - what the VATO has done is clearly an abuse of the powers conferred to him under the DVAT Act. It is in utter disregard of his statutory obligation of processing the refund claim in accordance and within the time stipulated for that purpose under the DVAT Act. The Court, therefore, has no hesitation to quash the default assessments of tax and interest dated 17th December, 2016 u/s 9 (2) of the CST Act and the default assessment of penalty dated 10th January, 2017 u/s 33 of the DVAT Act - refund orders will be issued by the VATO concerned in favour of the Petitioner - petition allowed - decided in favor of petitioner.

Summary

Issues:
- Delay in granting refund by Respondent DVAT Department
- Issuance of default assessments without notice or explanation
- Violation of natural justice
- Abuse of powers by VATO
- Failure to process refund claims within statutory time limits

Analysis:
1. The judgment addresses the issue of delay in granting refunds by the Respondent DVAT Department. The Court notes that numerous refund claims have been pending for years, despite strict time limits set by the DVAT Act and previous court decisions emphasizing the importance of timely refunds.

2. The Court criticizes the Respondent VATO for issuing default assessments without notice or seeking any explanation from the Petitioner. This action is deemed a violation of natural justice, as it was done without following due process and without considering the legal basis of the demands created.

3. The judgment highlights the abuse of powers by the VATO, who created demands without legal basis. The Court emphasizes that the VATO must operate within the legal framework and process refund claims promptly, regardless of the refund amount involved.

4. The Court concludes that the actions of the VATO in this case amount to an abuse of powers and a disregard for statutory obligations. As a result, the default assessments of tax, interest, and penalty are quashed, and the VATO is directed to issue refund orders in favor of the Petitioner within a specified timeframe.

5. The judgment underscores the importance of processing refund claims within the time limits set by the DVAT Act, regardless of the refund amount. Failure to comply with these statutory obligations may lead to legal consequences, as highlighted in this case where non-compliance could result in the Petitioner seeking further legal remedies.