2019 (7) TMI 730 - HC - VAT and Sales Tax

Refund claim - Review of finalized assessment order - subsequent cancellation of the C form issued to the dealer in Haryana in respect of the inter-state transaction, which was validly issued - suo motu an exercise of the powers of AVATO conferred under 74B (5) of the Delhi Value Added Tax 2004 - HELD THAT - The impugned order makes no mention of the date of cancellation of the said C form. It is obvious that it has been cancelled subsequent to the assessments under the CST Act being finalised by the AVATO in the present case. Also, the C form has not been cancelled because the firm in Haryana does not exist. In fact it appears to have migrated to the GST regime. The said firm is said to be a tax defaulter. Once the C form was validly issued and verified by the AVATO as indicated in the order dated 5th July 2017, then notwithstanding its subsequent cancellation, the assessment order finalised under the CST Act cannot be reviewed . Jurisdiction - powers of AVATO under Section 74(B)(5) DVAT Act to review the earlier order dated 5th July, 2017 - order reviewed suo moto but without any SCN being issued to the Petitioner - HELD THAT - The said exercise is declared to be unlawful. The refund due to the Petitioner together with the interest thereon be credited to the account of the Petitioner, if not already done, within a period of four weeks - petition allowed.

Summary

Issues:
1. Challenge to order raising tax demand under DVAT Act and CST Act
2. Failure to grant refund despite previous court order
3. Fresh enquiry leading to tax demand based on cancelled 'C' forms
4. Legality of exercising powers under Section 74(B)(5) DVAT Act without notice

Analysis:
1. The petitioner challenged an order by the AVATO raising a tax demand of ?1,23,13,745 for 2016 under DVAT Act and CST Act. The AVATO initially assessed the tax as nil due to a refund case involving mobile phones and accessories. Despite a court order directing a refund, the AVATO initiated a fresh enquiry with Haryana Authority, leading to the tax demand based on cancelled 'C' forms.

2. The AVATO's actions were questioned as no counter affidavit was filed, and coercive steps were stayed. The impugned order lacked clarity on the cancellation date of 'C' forms issued to the Haryana dealer. The cancellation, due to the dealer migrating to GST and being a tax defaulter, raised concerns on the petitioner's increased liability unjustly.

3. The AVATO's review of the assessment order without issuing a show cause notice was deemed unlawful, as highlighted in a previous judgment. Consequently, the impugned order dated 15th December 2017 was set aside, and the refund with interest was directed to be credited to the petitioner within four weeks. The writ petition was allowed, and pending applications were disposed of without costs.