2025 (2) TMI 178 - HC - VAT / Sales Tax

Assessment and refund of taxes under the Assam Value Added Tax Act 2003 (AVAT Act) and the Central Sales Tax Act 1956 - non-compliance to the Circular No. 15/2010 - HELD THAT - This Court had duly perused the Circular No. 15/2010 dated 23.08.2010. The said Circular is in respect to carrying out VAT Audit Assessment and do not prescribe any instructions or directions in so far as the Revisional Authority is concerned. Under such circumstances the question of challenging the revisional order dated 26.02.2020 on the basis of the Circular No.15/2020 is totally misconceived. This Court had perused the impugned orders dated 26.02.2020. It is seen that the Revisional Authority while deciding the said revision applications filed by the petitioner firm had made necessary enquiries as is apparent from a perusal of the contents of the revisional orders. The necessary enquiries were made on the basis of the Excise Documents Certificates from officers of receiving States of Arunachal Pradesh and Nagaland proof of the existence of the purchasing dealers the facts of sales and facts of goods reaching other States proved by excise documents - There is nothing on record to show that the impugned orders dated 26.02.2020 are result of fraud or is on account of collusion. This Court has also duly taken note of the impugned orders dated 26.02.2020 and there is nothing to show that the impugned orders suffers from any perversity. Under such circumstances the question of issuance of a writ in the nature of certiorari to set aside the impugned orders dated 26.02.2020 do not arise. This Court therefore finds no merits in the instant batch of writ petitions so filed by the Assistant Commissioner of Taxes Tinsukia challenging the impugned orders dated 26.02.2020 passed in respect to the Act of 2003 and Central Sales Tax Act 1956 for which the same stands dismissed. Conclusion - i) The pre-deposits for revision admission are not duty payments and must be refunded upon successful revision. ii) The tax authorities are directed to issue fresh assessment orders within six weeks and process refunds within four weeks thereafter. iii) The petitioner firm was entitled to a refund of pre-deposits with interest at 9% per annum from 08.05.2021. Petition dismissed.

The judgment involves a series of interconnected writ petitions concerning the assessment and refund of taxes under the Assam Value Added Tax Act, 2003 (AVAT Act) and the Central Sales Tax Act, 1956. The core issues revolve around the validity of revisional orders, entitlement to tax refunds, and the applicability of interest on delayed refunds.

Issues Presented and Considered:

The primary legal questions considered include:

Whether the revisional orders dated 26.02.2020, which quashed previous assessment orders, were validly issued.
Whether the petitioner firm is entitled to a refund of pre-deposits made during the revision process and whether interest should be awarded on delayed refunds.
Whether the non-compliance with Circular No. 15/2010 by the Revisional Authority invalidates the revisional orders.
Whether the show cause notice issued to the petitioner firm for refund rejection was justified.

Issue-Wise Detailed Analysis:

1. Validity of Revisional Orders:

Legal Framework and Precedents: The revisional orders were issued under Section 82 of the AVAT Act, 2003, allowing the Revisional Authority to reassess tax liabilities.
Court's Interpretation and Reasoning: The Court found that the Revisional Authority conducted necessary verifications and considered relevant documents, including excise documents and communications from tax authorities of other states, before issuing the orders.
Key Evidence and Findings: The Revisional Authority relied on excise documents and inter-state sales records to substantiate its decision.
Application of Law to Facts: The Court held that the Revisional Authority's decision was not vitiated by irrelevant considerations and complied with the statutory requirements.
Treatment of Competing Arguments: The State's argument that the Revisional Authority failed to comply with Circular No. 15/2010 was dismissed as the circular pertained to VAT audits, not revisional proceedings.
Conclusions: The revisional orders were upheld as valid, and the challenge by the Assistant Commissioner of Taxes was dismissed.

2. Entitlement to Refund and Interest:

Legal Framework and Precedents: The petitioner firm sought a refund of pre-deposits made during the revision process, arguing that these were not duty payments but preconditions for revision admission.
Court's Interpretation and Reasoning: The Court agreed that pre-deposits are not equivalent to duty payments and should be refunded following the successful revision.
Key Evidence and Findings: The Revisional Authority's orders directed refunds after necessary adjustments, which were not complied with by the tax authorities.
Application of Law to Facts: The Court found that the tax authorities' failure to issue fresh assessments and refund the pre-deposit amounted to an unjust delay.
Treatment of Competing Arguments: The State argued that pending appeals justified withholding refunds, but the Court found no stay order to support this.
Conclusions: The petitioner firm was entitled to a refund with interest at 9% per annum from 08.05.2021.

3. Compliance with Circular No. 15/2010:

Legal Framework and Precedents: Circular No. 15/2010 required thorough VAT audits for inter-state sales, including verification of movement and payment documents.
Court's Interpretation and Reasoning: The Court found that the circular applied to audit assessments, not revisional proceedings under Section 82 of the AVAT Act.
Key Evidence and Findings: The Revisional Authority conducted its proceedings independently of the circular's requirements.
Application of Law to Facts: The Court dismissed the argument that non-compliance with the circular invalidated the revisional orders.
Treatment of Competing Arguments: The Court rejected the State's contention that the circular was binding on the Revisional Authority.
Conclusions: The circular did not affect the validity of the revisional orders.

4. Justification of Show Cause Notice:

Legal Framework and Precedents: The show cause notice questioned the petitioner's refund claim and alleged interference with departmental decisions.
Court's Interpretation and Reasoning: The Court found the notice unjustified, given the absence of a stay on the revisional orders and the petitioner's entitlement to a refund.
Key Evidence and Findings: The notice lacked substantive grounds, as the revisional orders were valid and unchallenged.
Application of Law to Facts: The Court quashed the show cause notice as it was based on unfounded allegations.
Treatment of Competing Arguments: The State's defense of the notice was unsupported by any legal or factual basis.
Conclusions: The show cause notice was set aside.

Significant Holdings:

The revisional orders dated 26.02.2020 were upheld as valid, and the challenges by the Assistant Commissioner of Taxes were dismissed.
The petitioner firm was entitled to a refund of pre-deposits with interest at 9% per annum from 08.05.2021.
The Court directed the tax authorities to issue fresh assessment orders within six weeks and process refunds within four weeks thereafter.
The show cause notice dated 18.11.2021 was quashed.
The Court emphasized that pre-deposits for revision admission are not duty payments and must be refunded upon successful revision.

← Previous