2021 (2) TMI 967 - HC - VAT and Sales Tax

Refund - Seeking return the amount of tax collected from the different parties during the said period of assessment - non-communication of the cancellation of registration at the end of the respondents - It is the case of the writ applicant that after some business transactions, later on he came to know about his cancellation of registration with effect from 12.04.2010 and accordingly, he was duty bound to return the amount of tax collected from the different parties during the said period of assessment - HELD THAT - It appears that at the time of search, it was informed by the writ applicant that he had made the payment to different parties to the tune of ₹ 8,14,250/- by way of cheque. Despite of this, the authorities had collected the tax to the tune of ₹ 9,05,318/-. Also, since 2014, the respondent authorities have not issued any assessment order after serving notice of provisional assessment in the prescribed form. Even no notice has been issued by the respondent authorities invoking provisions of Section 8A(a) of Section 34 of the GVAT Act, 2003. The writ applicant is entitled to get the refund of amount. The authorities have no legal justification for withholding the amount, which is otherwise refundable to the writ applicant and the action of the respondent authorities could be said that such withholding of refund is contrary to the provisions of Section 36 of the GVAT Act, 2003. Reliance can be placed in the case of SHILPA INDUSTRIES VERSUS STATE OF GUJARAT 2020 (2) TMI 297 - GUJARAT HIGH COURT where it was held that In the facts of the case, no notice has been issued till date by the respondent authority invoking provisions of Section 8(A)(a) of Section 34 of the VAT Act, 2003. Therefore, in contemplation of invoking such provision for assessment without there being any satisfaction of the prescribed authority that the tax has been evaded etc. by the petitioner, the refund cannot be withheld. The respondents are directed to pay to the writ applicant a sum of ₹ 9,05,318/- together with statutory interest at the rate of 6% p.a. within a period of six weeks from the date of communication of this order - application allowed.

Summary

Issues:
1. Refund of tax amount under GVAT Act, 2003.
2. Delay in assessment and refund process.
3. Legal justification for withholding refund.
4. Interpretation of relevant provisions of GVAT Act, 2003.
5. Application of legal principles from a similar case.

Issue 1: Refund of tax amount under GVAT Act, 2003

The petitioner, engaged in the business of reselling grains and oilseeds, applied for cancellation of VAT registration. Despite collecting tax during the assessment period, the petitioner claimed that the registration cancellation was not communicated promptly. Subsequently, the petitioner was coerced to pay the tax amount on the spot during a search conducted by authorities. The petitioner sought a refund of the tax amount collected during the assessment period.

Issue 2: Delay in assessment and refund process

The petitioner alleged that no assessment order had been passed since 2014, and the time limit for assessment had expired. The respondent authorities had neither initiated assessment proceedings nor refunded the tax amount. The petitioner's requests for assessment or refund remained unprocessed, leading to the filing of the writ application seeking relief.

Issue 3: Legal justification for withholding refund

The High Court noted that despite the petitioner's explanation of payments made to different parties, the authorities collected tax exceeding the actual amount. The court observed that no assessment order had been issued since 2014, and the respondent authorities failed to follow the prescribed procedures for assessment or refund, indicating a lack of legal justification for withholding the refund.

Issue 4: Interpretation of relevant provisions of GVAT Act, 2003

The court referred to Section 36 of the GVAT Act, 2003, which provides for the refund of excess payments. It highlighted that in the absence of an assessment for the relevant year, and considering the expiration of the assessment time limit, the authorities were not entitled to withhold the refund. The court also discussed Section 39, which outlines conditions under which a refund may be withheld, emphasizing that such conditions were not met in the present case.

Issue 5: Application of legal principles from a similar case

The court cited a previous case, Shilpa Industries Vs. State of Gujarat, where a similar issue of withholding refunds without proper assessment was addressed. The court in the cited case directed the respondents to pay the refund amount along with interest, emphasizing the importance of following legal procedures and refraining from withholding legitimate refunds. The court applied the principles established in the cited case to the present matter, ruling in favor of the petitioner and directing the authorities to refund the tax amount along with statutory interest.

Overall, the judgment highlighted the importance of adherence to legal procedures, timely assessments, and the rightful refund of tax amounts under the GVAT Act, 2003, ensuring justice and fairness in tax matters.