2023 (3) TMI 1573 - HC - VAT / Sales Tax

Refund with interest arising from a Revised Excess Demand Notice issued by the Commercial Taxes Department - HELD THAT - Having regard the facts that the principal amount of refund has been disbursed in favour of the petitioner it is deemed fit to relegate the petitioner to approach the respondent no.3 Deputy Commissioner of State Taxes Bokaro Circle Bokaro with an application for claim of interest on the principal amount of refund. Needless to say such application shall be decided in accordance with law within a period of 6 weeks from the date of receipt of the application along with the copy of this order. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter were:

- Whether the petitioner is entitled to a refund of Rs. 3,54,21,551.00 along with statutory interest under the Jharkhand Value Added Tax Act, 2005 (JVAT Act) arising from a Revised Excess Demand Notice issued by the Commercial Taxes Department;

- Whether the delay in disbursement of the refund amount by the respondents violates the petitioner's rights under the JVAT Act, thereby entitling the petitioner to claim interest on the delayed refund under Section 55 of the JVAT Act;

- The appropriate remedy and procedure for the petitioner to claim interest on the refund amount, given the delay in payment;

- The scope of judicial intervention when the principal refund amount has been disbursed but interest claims remain unresolved.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Refund of Rs. 3,54,21,551.00

Relevant legal framework and precedents: The refund claim was made under Section 52 of the Jharkhand Value Added Tax Act, 2005 and Rule 19(2)(a) of the Jharkhand Value Added Tax Rules, 2006. The statutory provisions provide a mechanism for refund of excess tax paid or collected.

Court's interpretation and reasoning: The Court noted that the petitioner filed the refund application in the prescribed form, which was duly acknowledged. The Deputy Commissioner of Commercial Taxes, Bokaro Circle, after due enquiry and verification, recommended and confirmed the refund amount through orders dated 16.12.2020 and 17.03.2021. Subsequent enquiry reports dated 16.03.2021 and 29.11.2021 further corroborated the entitlement of the petitioner to the refund.

Key evidence and findings: The Court relied on the refund application, acknowledgement, enquiry reports, and the Deputy Commissioner's refund orders as documentary evidence establishing the petitioner's entitlement.

Application of law to facts: The statutory provisions and departmental orders confirmed the petitioner's right to refund the specified amount. The Court recognized that the refund amount was due and payable to the petitioner.

Treatment of competing arguments: The respondents did not dispute the petitioner's entitlement to the refund amount but focused on procedural aspects and timing of disbursement.

Conclusions: The Court concluded that the petitioner was entitled to the refund amount of Rs. 3,54,21,551.00 as per the statutory provisions and departmental orders.

Issue 2: Delay in Refund Payment and Claim for Interest under Section 55 of the JVAT Act

Relevant legal framework and precedents: Section 55 of the JVAT Act provides for payment of interest on delayed refunds. The statutory scheme mandates payment of interest at the prescribed rate if the refund is not made within the stipulated time.

Court's interpretation and reasoning: The Court observed that although the principal refund amount was eventually disbursed to the petitioner, there was a delay of more than two years from the date of application to the actual payment. The petitioner's claim for interest on this delayed refund was recognized as valid under Section 55.

Key evidence and findings: The Court noted the counter affidavit filed by the respondents, which admitted the delay and stated that the refund sanction order was issued on 22.10.2022, and the refund amount was disbursed only recently.

Application of law to facts: The delay in payment triggered the statutory provision for interest under Section 55. The Court acknowledged the petitioner's right to claim interest on the delayed refund amount.

Treatment of competing arguments: The respondents submitted that the petitioner should approach the Deputy Commissioner of State Taxes with an application for interest claim, which would be considered in accordance with law. The Court accepted this procedural approach.

Conclusions: The Court held that the petitioner's claim for interest on the refund amount survives and must be adjudicated by the competent authority in accordance with law.

Issue 3: Appropriate Remedy and Procedure for Claiming Interest

Relevant legal framework: The statutory scheme under the JVAT Act and Rules provides for administrative adjudication of refund claims and interest thereon. The Court's supervisory jurisdiction under writ jurisdiction enables it to ensure compliance with statutory mandates.

Court's interpretation and reasoning: The Court found it appropriate to direct the petitioner to file a formal application for interest claim before the Deputy Commissioner of State Taxes, Bokaro Circle, Bokaro. The Court mandated that such application be decided within six weeks from receipt.

Key evidence and findings: The respondents' counter affidavit and submissions supported this procedural remedy.

Application of law to facts: By relegating the petitioner to the statutory authority for interest claim adjudication, the Court ensured adherence to procedural norms while safeguarding the petitioner's substantive rights.

Treatment of competing arguments: The petitioner accepted this direction but reserved the right to approach the Court again if aggrieved by the authority's order.

Conclusions: The Court disposed of the writ petition on the basis that the principal refund amount had been disbursed and interest claims would be adjudicated administratively with liberty to approach the Court in case of dissatisfaction.

3. SIGNIFICANT HOLDINGS

- "The principal amount of refund has been disbursed in favour of the petitioner, we deem it fit to relegate the petitioner to approach the respondent no.3 Deputy Commissioner of State Taxes, Bokaro Circle, Bokaro with an application for claim of interest on the principal amount of refund."

- "Such application shall be decided in accordance with law within a period of 6 weeks from the date of receipt of the application along with the copy of this order."

- "Liberty is reserved with the petitioner, if he is aggrieved by the order on the claim for interest of refund amount