2022 (4) TMI 769 - HC - VAT and Sales Tax

Revision of assessment order - withholding of refund - seeking release of refund - assessment year 2013-14 - Haryana VAT Act, 2003 - HELD THAT - Section 20(5) of 2003 Act mandates that any amount refundable to any person as a result of an order passed by any Court, appellate authority or revising authority, shall be refunded to him on an application made in the prescribed manner. Section 21 prescribes the power to withhold refund to which an assessee claims himself to be entitled under Section 20. Section 21 clothes the competent authority with the power to withhold the refunds. However the same can be exercised only where an order giving rise to refund is subject matter of further proceedings and the taxing authority interested in the success of such proceedings is of the opinion that the grant of refund is likely to adversely affect the recovery in the event of success of such proceedings. Admittedly, in the present case, reference to the Commissioner for withholding the refund was made on 28.08.2019. On 28.08.2019, order passed by Tribunal i.e. the order giving rise to a refund was not subject matter of any further proceedings. So far as according of approval to withhold the refund by Commissioner on file is concerned, the same is inconsequential. From analysis of Section 21, one would infer that it confers power on Commissioner to pass an order withholding refund or allowing the refund on furnishing of security on satisfaction of the conditions enumerated under Section 21(2). Legislature was conscious of the fact that the power conferred to withhold refund in Section 21 is akin to exercising power to stay the money decree and thus, an option was given that the refund can be directed to be made on furnishing of security as the objective is to affect the recovery only. It goes without saying that any order passed to withhold the refund is prejudicial to the interest of assessee. Noting on file cannot be a substitute to an order required to be passed under the provisions of Section 21. Further impugned order Annexure P-10 is bereft of any reasoning. It is trite that mere reproduction of the words of statute cannot be construed as substitute for the reasons that an authority exercising statutory power is required to record. The impugned order is unsustainable - authorities are directed to issue refunds to the petitioner as per law within a period of one month from the date of receipt of certified copy of this order - petition allowed.

Summary

Issues:
1. Petitioner seeks quashing of order withholding refund
2. Petitioner seeks direction for release of refund
3. Dispute over refund under Haryana VAT Act, 2003
4. Revisional proceedings challenged by petitioner
5. Tribunal's order quashing revisional order
6. Application for refund and subsequent challenges
7. Legality of order under Section 21 of 2003 Act

Analysis:

1. The petitioner requested a writ to quash an order withholding a refund and sought a direction for its release. The petitioner, a registered assessee under the Haryana VAT Act, 2003, filed for the assessment year 2013-14. An excess tax refund of ?2,10,58,992/- was approved but not refunded. Various legal challenges were made, including revisional proceedings and appeals, leading to conflicting decisions.

2. The Haryana Tax Tribunal's order quashing the revisional order upheld the petitioner's entitlement to the refund. Subsequently, the petitioner applied for a refund, but the authority failed to respond, leading to another writ petition seeking a mandamus for refund payment. The impugned order dated 15/19.05.2020 was challenged on the grounds that it did not comply with the conditions required for exercising power under Section 21 of the 2003 Act.

3. The dispute centered around Sections 20 and 21 of the 2003 Act, dealing with refunds and the power to withhold refunds. Section 20 mandates refund on court or authority orders, while Section 21 grants authority the power to withhold refunds if further proceedings are pending and adverse effects on recovery are anticipated. The Commissioner can withhold refunds or direct payment on furnishing security within specified timelines.

4. The Court analyzed the provisions of Section 21 and found that the power to withhold refunds must be exercised judiciously. In this case, the order withholding the refund lacked reasoning and failed to comply with statutory requirements. Mere notations on file were deemed insufficient to substitute a formal order. The Court emphasized the need for a judicial approach and reasoned decisions when exercising powers under Section 21.

5. Consequently, the impugned order withholding the refund was deemed unsustainable and against the provisions of the 2003 Act. The authorities were directed to issue the refunds to the petitioner within a specified timeframe. The Court allowed the petition in favor of the petitioner, emphasizing the necessity for adherence to legal provisions and due process in matters concerning refunds under the VAT Act.

This detailed analysis of the judgment highlights the legal intricacies involved in the dispute over the refund and the Court's decision based on the interpretation of relevant statutory provisions.