2013 (1) TMI 95 - HC - VAT and Sales Tax

Rejection of application for refund as it was time barred - Refund of excess tax paid than due - Delhi Value Added Tax Act, 2004 Form DVAT-39 - Delay in filling of refund application - Condonation of delay - Assessee omitted to include the input tax credit in VAT return - Filling an objection under Section 74(1) read with Section 28(2) Held that - Where self-assessment is made, and upon later reconsideration, the assesse feels that he has deposited excess amount as tax, the only mechanism provided is an objection under Section 28. That can be filed within four years of his filing the return. However, where assessment is completed in other manner, or after notice issued by the concerned authorities, the route prescribed is under Section 74. It is in such cases that there is a shortened limitation period. Furthermore, the nomenclature adopted or the provision of law mentioned in the application would not detract from the remedies available to an applicant in law, or limit him to what he says in the claim. Invariably, applicants are guided by their advice; if that is defective, they cannot be deprived of the remedy. The Objection Hearing Authority (OHA) has to decide the merits of the objections filed by the Petitioner dealer. If it is found that the objections are duly supported by materials, maintained in due course of the business and the claim that the dealer has paid excess VAT is established from such documents, orders relating to the revised return for claiming the refund of the same have to be made in accordance with law. The case is therefore, remanded to the OHA. In favour of assessee

Summary

Issues:
1. Time-barred application for refund of excess tax amount.
2. Interpretation of Sections 28 and 74 of the Delhi Value Added Tax Act, 2004.
3. Majority decision of the VAT Tribunal and dissenting views.
4. Applicability of limitation periods for filing objections under different sections of the Act.

Issue 1: Time-barred application for refund of excess tax amount:
The petitioner, a registered dealer, submitted a VAT return for the first quarter of 2006-07 but failed to include input tax credit (ITC) of 66925/-. The objection filed under Section 74(1) read with Section 28(2) of the Act for refund of the excess tax amount was rejected by the Objection Hearing Authority (OHA) as time-barred. The petitioner contended that the objection was filed within the prescribed four-year period and argued against the rejection based on limitation. The counsel emphasized that the State cannot claim an amount it was not entitled to and that seeking an incorrect legal remedy due to ignorance of the law should not invalidate a legitimate claim.

Issue 2: Interpretation of Sections 28 and 74 of the Act:
The crux of the issue lies in the interpretation of Sections 28(2) and 74(4)(a) of the Act. The counsel for the petitioner argued that the longer four-year limitation period under Section 28 applies to objections based on the discovery of a mistake in the return, contrary to the two-month limitation under Section 74(4)(a) for objections against assessments made under different sections of the Act. The dissenting view endorsed by the Court highlighted that the objection filed by the petitioner was under Section 28 and not subject to the shorter limitation period specified in Section 74(4)(a).

Issue 3: Majority decision of the VAT Tribunal and dissenting views:
The High Court noted a pattern of dissent within the Tribunal, with the Chairman differing from other members in several cases. The Court expressed concern over the lack of collegiality and harmony within the Tribunal, emphasizing the impact of such behavior on litigants' confidence and the judicial system. The majority decision of the Tribunal in the present case was found to be in clear error of law, leading to the remand of the case to the Objection Hearing Authority for a fresh decision based on the merits of the objections filed by the petitioner.

Issue 4: Applicability of limitation periods for filing objections under different sections of the Act:
The Court clarified that objections filed under Section 28, based on the discovery of a mistake in the return, fall under the longer four-year limitation period, as opposed to objections under other sections subject to a shorter two-month limitation. The Court emphasized that the nomenclature or provision mentioned in the application should not limit the remedies available to an applicant in law. The judgment highlighted that applicants are guided by legal advice, and any defects in the advice should not deprive them of the rightful remedy.

In conclusion, the High Court allowed the petition, remanding the case to the Objection Hearing Authority for a fresh decision on the merits of the objections filed by the petitioner, emphasizing the correct interpretation of the limitation periods under different sections of the Delhi Value Added Tax Act, 2004.