2021 (6) TMI 434 - HC - VAT / Sales Tax

Refund of excess tax paid - ongoing works contract - composition scheme - HELD THAT - In the facts of the present case, such independent consideration by the 2nd or 3rd respondents was necessary, having regard to the fact that, in the third counter affidavit deposed to by the 1st respondent, it is stated that he had failed to mention about the amounts, which are claimed to be due from the petitioner as a ground for recommending to withhold the refund, have already been recovered by initiation of Garnishee proceedings from the third parties. Since, the 2nd and 3rd respondents have acted on such recommendation of the 1st respondent, who has failed to discharge his function as a tax administrator, the action of the 2nd and 3rd respondents in approving such recommendation of the 1st respondent, is no less a failure and the 3rd respondent had acted in abdication of the powers conferred on the said authority under the Act. The action of the 3rd respondent in seeking to accord approval to withhold refund is an afterthought, is evident from the fact that the petitioner has filed the present writ petition on 12.11.2020, after serving copy of the same on the learned Standing Counsel as required under the Writ Rules of this Court. It is upon the petitioner approaching this Court and filing the above Writ Petition, the respondents have set in motion the process of according approval to withhold the refund by invoking Section 40(2) of the Act, as admittedly, the proceeding of the 3rd respondent is dt. 28.11.2020, - viz., 15 days after the filing of the Writ Petition, and after Notice Before Admission was ordered by this Court, and the learned Standing Counsel appearing for the respondents sought time to get instructions in the matter on 18.11.2020. Thus, till 18.11.2020, the 3rd respondent had admittedly not exercised powers under Section 40(2) of the Act and could not have issued proceedings on 28.11.2020, while this Court is seized of the matter. This Court is of the view that the action of the 1st respondent in falsely deposing to the counter affidavits filed into this Court as an act of perjury; that the proceeding dt. 28.11.2020 issued by the 3rd respondent without independent exercise of mind and recording reasons therein, as held to be mandatory by this Court in PULP N PACK PRIVATE LIMITED 2009 (4) TMI 844 - ANDHRA PRADESH HIGH COURT and BHARAT SANCHAR NIGAM LTD. VERSUS STATE OF ANDHRA PRADESH AND ANOTHER 2009 (7) TMI 1157 - ANDHRA PRADESH HIGH COURT cannot be sustained, apart from being in contempt, liable to be proceeded against. Further, even the infractions, as recorded by the 1st respondent vide letter dt. 09.09.2019, seeking permission to withhold the refund under Section 40(2) of the Act, are unacceptable. The respondents are hereby directed to refund the amount of ₹ 4,44,62,188/- as determined by the 1st respondent under Revised Assessment Order dt. 15.05.2019, pursuant to the order of the Tribunal dt. 18.02.2019, by crediting the above said amount to the petitioner s bank account, within 15 days from the date of receipt of a copy of this order, along with interest due thereon at the rate of 1% per month, as provided under Section 39 of the Act, till the date of credit of the said amount - Petition allowed.

Summary

Issues Involved:

1. Non-grant of refund of excess tax paid.
2. Justification for withholding the refund.
3. Compliance with judicial orders and principles.
4. Procedural lapses in filing multiple counter affidavits.
5. Legal interpretation of Section 40(2) of the Andhra Pradesh Value Added Tax Act, 2005.

Issue-wise Detailed Analysis:

1. Non-grant of refund of excess tax paid:
The petitioner filed a writ petition challenging the respondents' failure to refund excess tax paid for the tax periods 2011-12 and 2012-13, amounting to ?4,44,62,188/-. This amount was determined by the Telangana Value Added Tax Appellate Tribunal in favor of the petitioner. Despite a revised assessment order confirming the refund, the amount was not credited to the petitioner’s bank account.

2. Justification for withholding the refund:
The respondents justified withholding the refund by stating that a revision against the Tribunal's order was pending before the High Court under Section 34 of the Act. They sought approval to withhold the refund under Section 40(2) of the Act, citing potential adverse effects on revenue. However, the court found that the reasons provided were inadequate and lacked independent consideration by the prescribed authority.

3. Compliance with judicial orders and principles:
The court emphasized that the respondents cannot withhold the refund merely because a revision is pending. The authority must record valid reasons for withholding the refund, which was not done in this case. The court referenced previous judgments, including BSNL V/s. STATE OF ANDHRA PRADESH, to highlight that the power to withhold refunds must be exercised with discretion and sound reasons.

4. Procedural lapses in filing multiple counter affidavits:
The respondents filed multiple counter affidavits without seeking the court's leave, which was criticized. The court noted that this practice wastes judicial time and causes unnecessary delays. The affidavits contained inconsistent justifications for withholding the refund, further demonstrating a lack of thorough verification and a casual approach.

5. Legal interpretation of Section 40(2) of the Andhra Pradesh Value Added Tax Act, 2005:
The court reiterated that Section 40(2) requires the prescribed authority to form an opinion that granting the refund would adversely affect revenue. The court found that the 3rd respondent’s approval to withhold the refund lacked independent reasoning and was based solely on the inputs from the 1st respondent. This approach was deemed incorrect and not in compliance with judicial precedents.

Conclusion:
The court allowed the writ petition, directing the respondents to refund the amount of ?4,44,62,188/- to the petitioner’s bank account within 15 days, along with interest at 1% per month as provided under Section 39 of the Act. The court also imposed costs of ?50,000/- on the respondents for their actions. Pending miscellaneous petitions were closed.