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2014 (12) TMI 46 - HC - VAT and Sales TaxWithholding of refund - petitioner received the impugned order passed under Annexure-3 withholding the amount of refund till disposal of the Second Appeal - Orissa Value Added Tax Act, 2004 (OVAT) - Held that - We are shocked that the learned Commissioner of Commercial Taxes instead of taking any action against the Assessing Officer for violating the mandate of Section 57 of the OVAT Act and not following/obeying instruction of the Commissioner for strict compliance of Section 57 of the OVAT Act has passed the impugned order withholding the claim of refund due to the petitioner. It is needless to say that if a subordinate authority will not obey the instruction/order/circular issued by the higher authority in the hierarchy of administration, it would cause chaos in the field of administration and certainly not help in smooth functioning of administration. - impugned order passed withholding refund of ₹ 26,86,357/- which flows from the first appellate order is not legally sustainable. - Decided in favor of assessee. Opportunity of hearing before passing of order under Section 60 (1) of the OVAT Act withholding claim of refund due to the dealer - Held that - In the present case, admittedly petitioner was not afforded an opportunity of hearing before the impugned order withholding refund claimed by the petitioner was passed. - order for withholding refund claims made by the petitioner is hereby quashed. - Decided in favor of assessee.
Issues Involved:
1. Legality of the order withholding refund of Rs. 26,86,357/-. 2. Entitlement to an opportunity of hearing before passing an order under Section 60 of the OVAT Act withholding the refund claim. 3. Final order and relief. Issue-wise Detailed Analysis: 1. Legality of the Order Withholding Refund of Rs. 26,86,357/- The petitioner challenged the order dated 14.5.2014, which withheld the refund claim of Rs. 26,86,357/- under Section 60(1) of the OVAT Act. The petitioner argued that the conditions precedent for exercising the power to withhold the refund were not satisfied, thereby violating Article 265 of the Constitution of India. The petitioner contended that no reasons were assigned in the impugned order and that the refund was not granted within the stipulated period as per Section 57 of the OVAT Act. The court noted that for withholding a refund under Section 60(1) of the OVAT Act, three conditions must be satisfied: 1. The order giving rise to the refund is the subject matter of an appeal or further proceeding. 2. The Commissioner is of the opinion that granting such a refund is likely to adversely affect the revenue. 3. It may not be possible to recover the amount later. The court found that while the first condition was satisfied, the impugned order did not address the other two conditions or provide any basis for the Commissioner's opinion that the refund would adversely affect the revenue. The court emphasized that the discretion to withhold a refund must be exercised judicially and on relevant grounds, and the impugned order was found to be a non-speaking order, lacking valid reasons. 2. Entitlement to an Opportunity of Hearing Before Passing an Order Under Section 60 of the OVAT Act The petitioner argued that no opportunity of hearing was provided before passing the impugned order, violating the principles of natural justice. The respondent contended that Section 60(1) of the OVAT Act does not mandate an opportunity of hearing before withholding a refund. The court held that if an order has civil consequences and adversely affects a party, the affected party must be given an opportunity of hearing, even if the statute does not explicitly provide for it. The court cited several precedents, including the Supreme Court's rulings in Baldev Singh and others vs. State of Himachal Pradesh and others, and Dr. Rash Lal Yadav vs. State of Bihar and others, which support the application of natural justice principles in administrative decisions affecting civil rights. Therefore, the court concluded that the petitioner should have been afforded an opportunity of hearing before the order was passed. 3. Final Order and Relief The court quashed the impugned order dated 14.5.2014 withholding the refund claims made by the petitioner. The writ petition was allowed without any order as to costs. Conclusion: The court found that the order withholding the refund of Rs. 26,86,357/- was not legally sustainable due to the lack of satisfaction of all conditions under Section 60(1) of the OVAT Act and the absence of valid reasons. Additionally, the court held that the petitioner was entitled to an opportunity of hearing before the order was passed, in line with the principles of natural justice. Consequently, the impugned order was quashed, and the writ petition was allowed.
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