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2016 (8) TMI 25 - HC - VAT and Sales TaxValidity of notice for revision - notice issued u/s 74A(2) of the DVAT Act - notices of default assessments of tax, interest and penalty - Held that - It is obvious that the notice dated 4th April 2013 issued under Section 74A (1) of the DVAT Act reproduces the mere words of the above provision without indicating the specific ground on which the Respondent proposes to revise the order dated 9th October 2009. As explained in Commissioner of C. Ex, Bangalore v. Brindavan Beverages (P) Limited (2007 (6) TMI 4 - SUPREME COURT OF INDIA), unless the grounds in the show cause notice (SCN) are specified it is not possible for the Assessee to answer such SCN. In other words, if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the notice was not given proper opportunity to meet the allegations indicated in the show cause notice. The impugned notice dated 4th April 2013 under Section 74A(2) of the DVAT Act is held to be bad in law and is accordingly quashed. The Petitioner is entitled to the refund claimed for the said periods along with interest. - Decided in favor of assessee.
Issues Involved:
1. Refund of excess tax credit for May 2007 and July 2007. 2. Quashing of the notice dated 4th April 2013 under Section 74A(2) of the DVAT Act. 3. Inclusion of subsidy in the sale price for VAT purposes. 4. Validity of the default assessments of tax, interest, and penalty. 5. Legal grounds for revising the order dated 9th October 2009 by the Objection Hearing Authority (OHA). Issue-wise Detailed Analysis: 1. Refund of Excess Tax Credit: The Petitioner, a dealer under the DVAT Act, claimed refunds of ?70,87,097 for May 2007 and ?11,02,969 for July 2007, which were not issued within the stipulated time. The Petitioner argued that no notice of audit or additional information was sought, nor any security demanded as per Sections 38(4) and 38(5) of the DVAT Act. Despite reminders, the refund was delayed, and the Petitioner became entitled to interest under Section 42(1) of the DVAT Act. The Court directed the Respondent to deposit the refund amount with interest, which was complied with on 30th March 2016. 2. Quashing of Notice Dated 4th April 2013: The Petitioner challenged the notice issued under Section 74A(2) of the DVAT Act, proposing to revise the OHA's order dated 9th October 2009, which had set aside default assessments. The Court found the notice to be a mere reproduction of the statutory provision without specifying the grounds for revision, thus making it unsustainable in law. The notice was quashed as it did not provide the Petitioner with a proper opportunity to respond. 3. Inclusion of Subsidy in Sale Price for VAT Purposes: The OHA had rejected the Respondent's contention that the subsidy from TTL should be included in the sale price of handsets. The Court upheld this view, referencing multiple precedents, including Neyveli Lignite Corporation Limited v. Commercial Tax Officer and Rashtriya Chemicals and Fertilizers Limited v. State of U.P., which established that subsidies not directly related to the sale transaction should not be included in the sale price for VAT purposes. The subsidy in question was for generating revenue from call charges, not for the sale of handsets. 4. Validity of Default Assessments: The OHA's order dated 9th October 2009 had set aside the default assessments of tax, interest, and penalty for May 2007, July 2007, and March 2008, concluding that the assessments were made to defeat the refund claim. The Court found no justification for revising this order, as the assessments were correctly set aside by the OHA. 5. Legal Grounds for Revising the OHA's Order: The Court examined whether there was justification for the Respondent to revise the OHA's order dated 9th October 2009. It concluded that the notice issued under Section 74A(2) was vague and lacked specific grounds, rendering it invalid. The Court emphasized that proper grounds must be specified in a show-cause notice to allow the Assessee to respond adequately. Judgment: The Court upheld the OHA's order dated 9th October 2009, set aside the notice dated 4th April 2013 under Section 74A(2) of the DVAT Act, and directed the refund amount with interest to be handed over to the Petitioner. The writ petitions were allowed, and the pending applications were disposed of with no orders as to costs.
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