2020 (12) TMI 1080 - HC - VAT and Sales Tax

Refund of excess tax paid - petitioner submitted that the Assessing Officer could not have adjusted the refund claims of the petitioner against future assessments - HELD THAT - The Assessing Officer committed a serious error in providing for adjustment of the excess tax against the demands for the later years. We may recall, while framing fresh assessments, the Assessing Officer found that the petitioner had paid certain excess tax in two of the four years concerned. In the other two years, where the tax was payable he raised a demand and we are told that such tax was also paid by the petitioner. For the years 2009-2010 and 2010-11, therefore, where the petitioner had admittedly suffered excess tax deduction at source as compared to his tax liability and thereafter deposited further amounts by way of pre-deposit for maintaining his revision petitions, he was entitled to refund thereof. Under sub-section (1) of Section 43 of Tripura Value Added Tax Act 2004, the Commissioner would refund to a dealer the amount of tax, penalty or interest, if any, paid by such dealer in excess of the amount due from him. Section 45 provides for payment of interest if the refund is not made within the time prescribed. Sub Section (1) of Section 46 provides that where an order giving rise to refund is subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue and it may not be possible to recover the amount later, the Commissioner may withhold the refund till such time as he may determine. It is true that the TVAT Rules provide for a mechanism for grant of refund. In particular, Rule 35 requires the registered dealer to file a refund application before the concerned authority in prescribed manner. sub-rule (4) of Rule 35 prescribes a time limit for making such an application for refund. However, in the present case, the Assessing Officer himself while framing fresh assessments had declared that the petitioner shall not be granted refund but the excess tax collected would be adjusted against the future assessments. Till this order was set aside, therefore, the petitioner had no occasion to file refund claim. Any such refund application filed under Rule 35 of the TVAT Rules would have been summarily dismissed. The portion of the order dated 16th December, 2015 passed by the Assessing Officer providing for adjustment of the excess tax to be adjusted for future assessment is set aside. However, if by virtue of the operation of the said order for any future liability such excess tax or any part thereof is already adjusted, the question of refund at this stage will not arise - The authority shall verify the petitioner s claim that for future years, he had no further tax liability and refund such excess tax with statutory interest which may not have been adjusted against the future liability of the petitioner. This exercise shall be completed within 3(three) months from today. Petition disposed off.

Summary

Issues:
1. Refund of tax amount sought by the petitioner.
2. Adjustment of excess tax against future assessments.
3. Interpretation of Tripura Value Added Tax Act and Rules regarding refund claims.

Analysis:
Issue 1: The petitioner filed a petition seeking a refund of ?11,44,390 from the respondents. The petitioner, engaged in executing work contracts, had disputes regarding Value Added Tax liability for specific assessment years. The Assessing Officer passed fresh assessment orders, determining tax payable for different years. The petitioner claimed an excess amount, including pre-deposit, totaling ?11,44,390, should be refunded.

Issue 2: The Assessing Officer adjusted the excess tax against future assessments without confirming pending demands or potential future liabilities. The High Court found this adjustment improper, stating that the petitioner, having paid excess tax in certain years, was entitled to a refund. The court cited relevant sections of the Tripura Value Added Tax Act, emphasizing the Commissioner's authority to refund excess amounts paid by a dealer. The court noted that the Assessing Officer's decision to adjust the refund without proper grounds was illegal and could deprive the petitioner of the refund indefinitely.

Issue 3: The respondents argued that the Tripura Value Added Tax Rules, 2005, outlined procedures for refund claims. However, the court observed that the Assessing Officer's decision to deny the refund and adjust it against future assessments prevented the petitioner from filing a refund claim as required by the rules. The court set aside the order adjusting the excess tax against future assessments and directed the authority to verify if any excess tax had been adjusted for future liabilities. If no further assessments were pending, the petitioner was to receive the refund with statutory interest within three months.

In conclusion, the High Court granted the petitioner's request for a refund, emphasizing the importance of following legal procedures and ensuring taxpayers' rights are upheld.