2015 (2) TMI 883 - HC - VAT and Sales Tax

Denial of refund claim - Excess tax paid - Section 40 - Held that - Section 40 of the UP VAT Act provides for a refund to the dealer for the amount of tax paid by him in excess to the amount due for him - petitioner deposited a sum of ₹ 16,06,94,740.00 for the month of April and May, 2013 under the VAT Act and under the CST Act, which orders have been set aside. The petitioner thereafter filed an application under Section 40 of the VAT Act, which was rejected on the ground that the amount has been adjusted towards the outstanding demand for the assessment year 2010-11. The petitioner thereafter filed a rectification application contending that the outstanding amount payable for the assessment year 2010-11 was only ₹ 11,25,88,286.00 and there were no other outstanding demand for any assessment year and, therefore, the balance amount of ₹ 4,81,06,454.00 should be refunded. This rectification application was also rejected. The Special Counsel for the State admitted that only ₹ 11,25,88,286.00 was outstanding for the assessment year 2010-11 but contended that since no order of refund was passed by the appellate authority in the appeal of the petitioner, the respondents were not obliged to refund the amount under Section 40 of the VAT Act. It is not necessary that an order of refund is required to be passed by the assessing authority in the assessment order or by the appellate authority. If no orders are passed, it is always open to the assessee to file an application under Section 40 of the VAT Act for refund of the amount upon which the competent authority is obliged to adjudicate on that application and pass an order for refund if after adjustment towards outstanding tax any amount is found to be in excess and which is required to be refunded. By not passing an order of refund when the amount is found to be refundable would amount to be judicial misconduct. We find that there was an error apparent on the record and the rectification application was rightly filed, which was rejected mechanically without application of mind. The outstanding amount due for the assessment year 2010-11 was only ₹ 11,25,88,286.00. The petitioner had deposited a sum of ₹ 16,06,94,740.00 and, consequently, an excess amount of ₹ 4,81,06,454.00 was liable to be refunded since admittedly there were no other outstanding dues against the petitioner. Similarly, for the assessment year 2009-10, an amount of ₹ 3,63,95,862.00 was also liable to be refunded in the absence of any outstanding dues against the petitioner. - Supreme Court 2008 (7) TMI 563 - SUPREME COURT OF INDIA in its order had clearly directed the respondents to refund the excess amount deposited by the petitioner. - Decided in favour of Appellant.

Summary

Issues:
1. Provisional assessment order passed under the VAT Act and CST Act for the months of April and May 2013.
2. Disputed demand and interim stay granted by various authorities.
3. Refund application under Section 40 of the VAT Act for the amounts deposited.
4. Best judgment assessment order for the assessment year 2009-10 under VAT Act and CST Act.
5. Rejection of refund application and rectification application by the appellate authority.
6. Interpretation of Section 40 of the VAT Act for refund provisions.
7. Judicial review of the rejection of refund application and rectification application.

Analysis:
1. The petitioners, engaged in trading electronic products, challenged provisional assessment orders under the VAT Act and CST Act for April and May 2013. Appeals were filed, leading to remand for fresh assessment.
2. Disputes arose regarding the disputed tax amounts, leading to interim stays granted by different authorities, including the Tribunal and the High Court, with varying percentages.
3. The petitioners sought refunds of the amounts deposited under protest based on the orders of the Ist Appellate Authority and the Supreme Court, leading to rejection by the Joint Commissioner, prompting a rectification application.
4. Best judgment assessment orders for the assessment year 2009-10 were challenged, leading to stay orders and subsequent deposit of sums by the petitioners.
5. Refund applications for the deposited amounts were rejected by the appellate authority, leading to the present writ petition seeking refunds.
6. The Court analyzed Section 40 of the VAT Act, emphasizing the requirement of an order for refund after adjudication, citing relevant legal precedents.
7. The Court held that the rejection of refund applications without passing orders amounted to judicial misconduct, directing the respondent to refund the excess amounts deposited by the petitioners for the respective assessment years.

This detailed analysis covers the issues related to provisional assessment orders, disputed demands, refund applications, best judgment assessment orders, and the interpretation of refund provisions under the VAT Act, culminating in the Court's decision to quash the impugned orders and issue a writ of mandamus for the refunds.