2016 (11) TMI 845 - HC - VAT and Sales Tax

Refund of excess VAT amounts - the petitioner is entitled to refund in the first instance but that sometime in January 2016, further liabilities arose on account of the later period. This, according to the VAT authorities, entitled them to adjust the amounts payable - Held that - a direction is issued to the respondents to process the petitioner s claim for refund and pass appropriate orders and ensure that the amounts together with up-to-date interest (till date of payment) are released to its account within a week from today. In case of any discrepancy or shortfall of interest, it is open to the petitioner to move an application in that regard. The same shall be decided within one month of its receipt by the concerned VATO - appeal allowed.

Summary

Issues:
Claim for refund of excess VAT amounts for previous periods, adjustment of refund liability towards later period demands, suspension of adjustment order by Objection Hearing Authority (OHA), direction for processing refund claim and release of amounts with interest.

Analysis:
The petitioner sought a direction for the refund of excess VAT amounts for specific previous periods. The VAT authorities claimed that the petitioner was entitled to a refund initially, but later liabilities emerged for a subsequent period, justifying the withholding of the refund under Section 38(2) of the DVAT Act, 2004. However, the petitioner had filed a petition with the Objection Hearing Authority (OHA) in March 2016, which automatically suspended the order of adjustment of refund amounts under Section 35(2) of the Act. Consequently, the authorities were not permitted to set-off the refund liability against the demands created for the later period. The OHA was directed to independently determine the petitioner's liability for the later period.

The High Court, considering the circumstances, issued a direction to the respondents to process the petitioner's refund claim promptly. The court ordered the release of the refund amounts along with up-to-date interest to the petitioner's account within a week. In case of any discrepancy or shortfall in interest, the petitioner was given the option to submit an application, which would be decided within one month by the concerned VATO. The writ petition was allowed on the terms mentioned, ensuring the timely processing and release of the refund amounts to the petitioner.

Therefore, the judgment addressed the issues of refund claim for excess VAT amounts, the authority's attempt to adjust the refund against later period demands, the suspension of adjustment order by the OHA, and the court's direction for processing the refund claim and releasing the amounts with interest to the petitioner within specified timelines.