2022 (8) TMI 1097 - HC - VAT and Sales Tax

Adjustment of excess credit towards outstanding balances under the APVAT and CST Acts - validity of refund audit proceedings - release of cash refund - violation of principles of natural justice - HELD THAT - It is clear that the respondents are due a sum of Rs.44,66,069/- excess credit . But, technicalities are coming in the way of returning the excess credit. In fact, it would be appropriate to refer to the Endorsement dated on 05.02.2019 issued by the Commercial Taxes Department, Office of the Assistant Commissioner (ST), Bapatla. The Learned Government Pleader for Commercial Taxes also placed on record the Endorsement dated 30.06.2022 wherein it is stated that though the dealer is entitled for refund of Rs.44,66,069/-, but he did not furnish any purchase invoices and unless the tax invoices in original are placed, it is not possible to process to claim for refund. To this, learned counsel for the petitioner submits that all the invoices were infact furnished to the Department and in spite of the same, there is no response. Having regard to the fact that the issue of refund is pending for a considerable period of time, the present writ petition is disposed of, with a direction to the petitioner to submit either original purchase invoices if not submitted earlier or copies of the purchase invoices if the originals are already submitted within a period of ten (10) days from today - application disposed off.

Summary

Issues:
1. Interpretation of circular instructions and rules regarding adjustment of excess credit under APVAT and CST Acts.
2. Entitlement to refund of excess ITC and delay in payment.
3. Requirement of original purchase invoices for processing refund claims.

Analysis:
1. The petitioner, a registered dealer under APVAT and CST Acts, sought relief against the endorsement proceedings adjusting excess credit towards outstanding balances. The petitioner claimed entitlement to a refund of Rs.44,66,069/- based on audit proceedings and circular instructions. The first respondent's refusal to adjust the dues pre-bifurcation of the state led to the filing of the writ petition, alleging jurisdictional issues and violation of natural justice principles.

2. The petitioner engaged in processing raw cotton seeds claimed excess ITC for the tax periods ending in 2015, 2016, and 2017. The first respondent conducted audit proceedings determining excess credit as Rs.44,66,069/-. Despite issuing a notice for refund, the respondent adjusted tax arrears from the refund claim, leading to the petitioner's request for release of the refund. The delay in processing the refund claim due to pending refund audit and technical reasons was acknowledged by the Government Pleader for Commercial Taxes.

3. The court noted the petitioner's entitlement to the refund amount but emphasized the technicalities hindering the payment. The circular instructions and the endorsement highlighted the pre-bifurcation context affecting the refund process. The court directed the petitioner to submit original or copies of purchase invoices within ten days to facilitate the refund processing, emphasizing adherence to legal procedures for payment within three months, considering the prolonged delay in resolving the refund issue.