2017 (2) TMI 43 - HC - VAT and Sales Tax

Rectification of mistake - whether the provisional refund can be rejected merely on the ground that the return and the revised return contain the error? - Held that - Although the impugned order computes the refund at ₹ 85,56,547/-, we have refrained from passing a mandatory order directing the respondents to refund the balance amount also at the provisional stage in the event of there being any other circumstances which prevents the petitioner from being paid the entire amount towards provisional refund. It is clarified that the mere fact that the return and the revised return contain the alleged error would not be a ground for rejecting the same - limiting the amount of refund under sub section (3) of Section 20 of the Haryana Value Added Tax Act, 2003, allegedly in interest of revenue would be arbitrary and not reasonable. There are no reasons for this ground in interest of revenue - the respondent shall pass a fresh order for provisional refund - petition allowed by way of remand.

Summary

Issues:
Challenge to provisional refund order

Analysis:
The petitioner challenged the order of the Excise & Taxation Officer-cum-Assessing Authority, which allowed a provisional refund of only ?39 lacs against the claim of about ?83 lacs. The matter pertained to the period from 01.04.2015 to 30.06.2015. Initially, the petitioner claimed a refund of only ?4 lacs, but later filed a revised return on 03.11.2015 due to calculation errors, followed by another application on 06.11.2015 pointing out a mistake in considering the output liability. The application for provisional refund was made on 04.04.2016, which was disposed of by the impugned order dated 16.08.2016. The order accepted the petitioner's output liability under the Haryana Value Added Tax Act and the Central Sales Tax Act, aggregating to ?23,39,463, with a refund provisionally assessed at ?85,56,547.

The issue arose when the provisional refund was limited to ?39 lacs, despite the petitioner being entitled to ?85,56,547, as per the order. The court emphasized that an assessee is entitled to have their application for provisional refund decided on relevant facts and a reasonable basis. The authorities should consider the corrected return, even if the original was incorrect, to assess the refund application. Respondent No.2 did not provide valid reasons for limiting the refund amount to ?39 lacs, stating it was in the interest of revenue, which the court found to be arbitrary and unreasonable.

In the final order, the court directed Respondent No.2 to pass a fresh order considering the petitioner's application for a provisional refund of ?83,04,021, and refrained from mandating the refund of the balance amount at the provisional stage, clarifying that errors in the return should not be a ground for rejection. Respondent No.2 was requested to pass a fresh order by a specified date to rectify the issue and ensure a fair assessment of the refund amount.