2019 (5) TMI 805 - HC - VAT and Sales Tax

Refund of VAT - refund claimed on the ground that its output tax liability is less than the input tax paid - inter-state sales - concessional rate of tax - C-Forms - HELD THAT - The default assessment order has been generated only to defeat the refund claim of the petitioner, which, in any event, ought to have been paid well before the impugned orders were made. The impugned default assessment orders expressly state that there is no mismatch between the selling and purchasing dealers. Yet a demand is sought to be raised in respect of alleged mismatch. In the case of PRADEEP ENTERPRISES VERSUS COMMISSIONER OF TRADE TAXES ANR. 2017 (4) TMI 1438 - DELHI HIGH COURT where a default assessment order was set aside as being in abuse of statutory powers. The impugned default assessment orders dated 14.11.2018 and the refund adjustment order dated 15.11.2018 cannot be sustained, and the same are hereby set aside - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to default assessment orders and refund adjustment order under the Delhi Value Added Tax Act, 2004.

Analysis:
1. The petitioner, engaged in trading of shoe accessories, sought a refund under the DVAT Act for the quarter 01.01.2014 to 31.03.2014. The failure to issue the refund led to a writ petition. However, default assessment orders were passed for five quarters, resulting in a demand.

2. The petitioner argued that the refund should have been made within two months of filing returns, as per Section 38(3)(ii) of the DVAT Act. The assessment did not reveal any justifiable reason for the extended period under Section 34. The respondent claimed a mismatch in dealer accounts, justifying a review.

3. Section 38 of the DVAT Act outlines the refund process, emphasizing timely refunds after return filing. The default assessment orders were issued long after the statutory timelines, indicating improper withholding of refunds during the petition's pendency.

4. The petitioner presented evidence of ongoing refund processing until a sudden mismatch claim led to default assessment. Previous court judgments highlighted that refund delays should not result in fresh demands, emphasizing adherence to statutory timelines and procedures.

5. In line with previous rulings, the court set aside the default assessment and refund adjustment orders, directing the authorities to refund the claimed amount with interest within four weeks. The judgments underscored the importance of timely refunds and proper adherence to legal procedures.

6. The decision highlights the significance of procedural fairness and adherence to statutory timelines in tax refund matters, ensuring that legitimate refund claims are processed promptly and without undue delay or arbitrary assessments.