2021 (2) TMI 297 - HC - VAT and Sales Tax

Correctness of the rejection of the application seeking refund - Time limitation - rejection on the ground that the same was filed beyond the prescribed period of 180 days without sufficient explanation being furnished explaining the delay in filing the application for refund - HELD THAT - It is seen that Section 50 of the Assam Value Added Tax, 2003 provides that, if it is found on assessment or reassessment that a dealer has paid tax, interest or penalty in excess of what is due from him, the Prescribed Authority shall, on a claim being made by the dealer in the prescribed manner and within the prescribed time refund to the dealer the amount of tax, penalty and interest paid in excess by him - The Rule 29 of the Assam Value Added Tax Rules 2005 provides that a claim for refund as provided under Section 50(1) of the AVAT Act, 2003 shall be made in Form 37 within 180 (one hundred and eighty days) from the date of assessment or reassessment. The said Rule prescribes the manner in which the Form is to be filled and submitted seeking claim of refund. Provisio to Rule 29(1)(a) of the AVAT Rules gives a latitude to the Prescribed Authority to entertain an application seeking refund submitted even after the prescribed period of 180 (one hundred and eighty days) from the date of assessment or reassessment as the case may be. The Prescribed Authority may consider the refund claim if it is satisfied that the dealer had sufficient cause for not making an application within the said period. What will be sufficient cause has not been described in the statute. The Prescribed Authority is given the liberty to entertain such claims that may be filed even after the expiry of prescribed period of 180 (one hundred and eighty days) from the date of assessment or reassessment on sufficient causes being shown by the dealer. Accordingly, it is implied under the provisions of Section 50 of the AVAT Act 2003 read with Rule 29(1)(a) AVAT Rules 2005 that if cause(s) shown by a dealer are not considered to be sufficient then the Prescribed Authority must reflect and disclose the reasons therefor in the order passed by the Prescribed Authority rejecting any claim for refund made by a dealer, namely the petitioner company in the present proceeding. The impugned order is interfered with and is accordingly set aside and quashed - matter is remanded back to the respondent authorities to re-decide on the question of grant of refund as prayed for by the writ petitioner - Petition allowed by way of remand.

Issues Involved:
1. Rejection of refund applications on the ground of delay.
2. Legal provisions and interpretation of Section 50 of the AVAT Act, 2003 and Rule 29 of the Assam VAT Rules, 2005.
3. Adequacy of reasons for delay in filing refund applications.
4. Applicability of principles of fairness and justice in tax refund claims.
5. Procedural requirements and their impact on substantive rights.

Detailed Analysis:

1. Rejection of Refund Applications on the Ground of Delay:
The petitioner company filed refund applications for excess tax paid for the assessment years 2006-07 to 2010-11. These applications were rejected by the respondent authorities on the ground that they were submitted beyond the prescribed time limit under the AVAT Act, 2003 and the Rules made thereunder. The petitioner claimed that the initial refund applications were not acknowledged by the respondent authorities, leading to the re-filing of applications which were then rejected for being late.

2. Legal Provisions and Interpretation of Section 50 of the AVAT Act, 2003 and Rule 29 of the Assam VAT Rules, 2005:
Section 50 of the AVAT Act, 2003 provides for the refund of excess tax, penalty, or interest paid by a dealer, subject to a claim being made in the prescribed manner and within the prescribed time. Rule 29 of the Assam VAT Rules, 2005 specifies that such a claim must be made within 180 days from the date of assessment or reassessment. However, the proviso to Rule 29(1)(a) allows the Prescribed Authority to admit a late application if sufficient cause is shown by the dealer.

3. Adequacy of Reasons for Delay in Filing Refund Applications:
The petitioner argued that they had filed the refund applications within the prescribed time but failed to provide proof of submission. The respondent authorities rejected the applications without adequately addressing the reasons for the delay provided by the petitioner. The court noted that the impugned order did not reflect any inquiry or verification of the petitioner's claims and lacked sufficient reasoning for rejecting the delay in filing the refund applications.

4. Applicability of Principles of Fairness and Justice in Tax Refund Claims:
The petitioner contended that the refusal to grant the refund of legitimately due amounts amounted to withholding revenue without legal sanction. The court referred to various judgments of the Apex Court, emphasizing that public bodies must act fairly and justly, regardless of technicalities. The court highlighted that legitimate claims for refunds should not be defeated by a legalistic attitude and that fairness and justice demand the due consideration of such claims.

5. Procedural Requirements and Their Impact on Substantive Rights:
The court observed that procedural requirements should not deny substantive benefits to the assessee. It was noted that the Prescribed Authority has the discretion to entertain late applications if sufficient cause is shown. The court criticized the respondent authorities for not adequately addressing the reasons for the delay and for failing to verify the petitioner's claims of timely submission. The court also emphasized that subsequent explanations in affidavits cannot improve an order already passed by the Departmental Officer.

Conclusion:
The court allowed the writ petition, set aside the impugned order dated 09.12.2016, and remanded the matter back to the respondent authorities to re-decide on the question of granting the refund, keeping in view the law laid down by the Apex Court. The court emphasized the need for fairness and justice in dealing with tax refund claims and criticized the respondent authorities for not adequately addressing the reasons for the delay provided by the petitioner.

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