2014 (2) TMI 252 - HC - VAT and Sales Tax

Refund - Bar of limitation - Change law not given retrospective effect - Refund of duty paid under mistake of law - Writ jurisdiction - Held that - right to claim refund is a vested right and that even if it is held to be an existing right and not vested right, such a right cannot be taken away unless it is taken away by a statutory enactment expressly or by necessary implication. An amendment reducing the period of limitation takes effect prospectively unless it has retrospective effect by express terms or by necessary intendment. Accordingly such an amendment will apply to cases in which right to claim refund arose after the amendment and it cannot govern the cases where the right to claim refund has arisen prior to the date of amendment. When the petitioner sought to submit the application on 20 August 2012 claiming refund for the year 200910, the three years period of limitation had not yet expired as the same was to expire on 31 March 2013. In this view of the matter, the right which was vested in the petitioner or at least which was an existing right on the date of amendment on 21 April 2011, could not have been taken away without express terms or necessary intendment in the Amending Act. Having gone through the provisions of the Amending Act, as quoted hereinabove, we find that the amended section 51(7) of MVAT Act, 2002 reducing the period of limitation from 3 years to 18 months is clearly prospective and not retrospective. Hence, the petitioner was entitled to claim refund within the limitation period of 3 years which was to expire on 31 March 2013. When the refund application was made on 20 August 2012, the respondent authority clearly erred in law in rejecting the refund application on the ground that it was time barred - Following decision of Universal Drinks Pvt. Ltd. vs. Union of India 1984 (4) TMI 59 - BOMBAY HIGH COURT - Decided in favour of assessee.

Summary

Issues involved:
1. Interpretation of the limitation period for filing a refund application under the Maharashtra Value Added Tax Act, 2002.
2. Whether the amendment to section 51(7) of the MVAT Act, 2002 is retrospective or prospective.

Analysis:
1. The petitioner filed a writ petition seeking a mandamus to direct the respondents to accept their application for a refund within the limitation period of 3 years for the Financial Year 2009-10. The petitioner's application in Form 501 was rejected by the authorities despite being filed well before the expiration of the limitation period. The petitioner argued that the right to claim a refund is a substantive right and not merely procedural, citing relevant legal precedents to support their position.

2. The respondents opposed the petition, relying on an amendment to section 51(7) of the MVAT Act, 2002, which substituted "three years" with "eighteen months" for filing refund applications. They referred to a Trade Circular extending the deadline for submitting refund applications for the year 2009-10. The revenue contended that the circular was widely publicized, and the petitioner should have adhered to the extended deadline. They argued that the Court cannot direct authorities to ignore statutory limitations.

3. The Court analyzed the retrospective or prospective nature of the amendment to section 51(7) of the MVAT Act, 2002. Referring to legal precedents, the Court held that the right to claim a refund is a vested right and cannot be taken away without express terms or necessary intendment in the Amending Act. The Court concluded that the amendment reducing the limitation period to 18 months was prospective and not retrospective. Therefore, the petitioner was entitled to claim a refund within the original 3-year limitation period, and the authorities erred in rejecting the application as time-barred.

4. The Court distinguished previous judgments cited by the revenue, emphasizing that the validity of section 51 of the MVAT Act, 2002 was not challenged, and they were not directing authorities to disregard the statutory limitation period. As the petitioner succeeded on the main ground, other contentions raised by the petitioner were deemed unnecessary for consideration. Consequently, the Court allowed the petition, directing the respondents to consider the petitioner's refund application for the year 2009-10 within the prescribed limitation period.