2019 (5) TMI 1280 - HC - VAT and Sales Tax

Refund claim - finalization of provisional assessment - power to remand the matter to the VATO - refund is sought to be denied by creating fresh demands which for some periods is nil and for others on completely untenable grounds for which orders have already been set aside by the OHA and ATVAT - HELD THAT - The order passed by the OHA remanding the matter to the VATO is dated 21st February 2017. Although no time limit was set, it is clear that the fresh order to be passed within 1 year from the date of the order was not passed. As far as the order passed by the ATVAT is concerned, it is dated 30th July 2015 and within 1 year thereafter the fresh assessment order had to be passed. Again, the VATO failed to do so. Consequently, with the earlier demands already having been set aside by the OHA and the ATVAT and no fresh orders having been passed by the VATO pursuant to the remand during the time stipulated, there is no justification whatsoever in denying the refund due to the Petitioner. A direction is issued to the Respondents to refund to the Petitioner the sum of ₹ 1,58,99,041/- within a period of 8 weeks from today together with interest from the expiry of 1 month from the filing of respective returns in terms of Section 42 of the DVAT Act. If the above directions are not followed it will make the Respondents liable to pay further simple interest @ 6% per annum on the aforesaid sum for the period of delay - Petition disposed off.

Summary

Issues:
1. Denial of refund by Respondents based on system-generated zero demand orders.
2. Rejection of refund claims by Assessing Authority and Special Objection Hearing Authority.
3. Failure of Petitioner to appear before Value Added Tax Officer for reassessment.
4. Creation of demands against Petitioner including penalties for various periods.
5. Interpretation of legal obligations regarding refund issuance and assessment orders.
6. Supreme Court's dismissal of special leave petition against a similar judgment.
7. Failure of Value Added Tax Officer to pass fresh assessment orders within stipulated time limits.

Analysis:
1. The Petitioner, a proprietorship registered under the DVAT Act, sought a refund of ?1,58,99,041 for specific tax periods. The Respondents denied the refund citing zero demand orders issued without proper assessment, as highlighted in previous court orders.
2. The Respondents rejected refund claims for certain periods, including penalties, which were challenged by the Petitioner through objection applications and appeals. The court emphasized the need for proper assessment and remand orders for refund processing.
3. The Respondents alleged the Petitioner's failure to appear for reassessment, leading to delays in finalizing demands and refunds. The court clarified the statutory duty of the VATO to pass fresh orders even in the absence of the Petitioner.
4. Various demands and penalties were imposed on the Petitioner for different periods, with objections filed and appeals made. The court stressed the importance of timely reassessment and reframing of demands by the authorities.
5. The judgment highlighted the mandatory nature of time limits for refund processing under the DVAT Act, emphasizing the need for VAT authorities to adhere to legal obligations and timeframes for assessments and refunds.
6. The Supreme Court's dismissal of a special leave petition against a similar judgment reinforced the importance of proper assessment and refund procedures.
7. The court directed the Respondents to refund the Petitioner within a specified period, noting the failure of the VATO to pass fresh assessment orders within the stipulated time limits, thereby justifying the refund issuance.

This comprehensive analysis of the legal judgment showcases the issues involved, the court's interpretation of legal obligations, and the directives issued to ensure proper refund processing and assessment procedures under the DVAT Act.