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2023 (9) TMI 1006 - HC - VAT and Sales TaxRefund of Input Tax Credit - Adjustment of refund with tax demand - Delay in processing the refund beyond - petitioner did not respond to several notices issued under Section 59 (2) of DVAT Act - time limitation - HELD THAT - A fortiori the impugned adjustment letter dated 18 November, 2022 cannot be sustained in law since the mandate of Section 38 read with Section 39 and 59 of the DVAT Act was not followed. Therefore, the petitioner is entitled to the refund claimed. Validity of default notices of tax interest - HELD THAT All said and done, in so far as issuance of the impugned default notices of tax interest is concerned, in light of the case of the respondent that revised return dated 31 March 2017 was filed for the 4th quarter 2015-16 and notices under Section 59(2) DVAT Act dated 19 February 2016, 27 May 2016 and 25 May 2018 were not complied with by the petitioner, the only recourse in law is to file a statutory appeal under Section 74 of the DVAT Act and it would be open to the petitioner to raise all objections regarding untenability of the impugned default notices of tax interest including under Section 34 of the DVAT Act with regard to the limitation prescribed for assessment or re-assessment. The instant Writ Petition is partly allowed to the effect that the impugned adjustment order dated 18 November 2022 is hereby quashed and the respondent is consequently directed to refund the amount of Rs. 17,10,15, 285/- for the 4th quarter of 2015-16 and also Rs. 5,44,39,148/- for the 1st quarter of 2017-18 along-with interest as per Section 42 of the DVAT Act from the date it fell due till realisation.
Issues Involved:
1. Validity of the impugned adjustment order dated 18 November 2022. 2. Validity of unsigned default notices of assessments. 3. Entitlement to refund along with interest as per Section 42 of the DVAT Act. 4. Maintainability of the writ petition in light of available alternate statutory remedies. Summary: 1. Validity of the Impugned Adjustment Order: The Court found that the impugned adjustment order dated 18 November 2022 violated Section 38 of the DVAT Act. Section 38(2) mandates that excess tax should first be applied towards any other amount due under the Act before being refunded. The Court cited previous case law to emphasize that the Tax Department cannot retain or utilize pre-deposit amounts for adjustments unless an enforceable tax demand exists. Consequently, the adjustment order was quashed, and the petitioner was entitled to the refund claimed. 2. Validity of Unsigned Default Notices of Assessments: The petitioner challenged the unsigned default notices of assessments dated 30 March 2020, 23 March 2021, 30 March 2021, and 26 March 2022. The Court noted that the petitioner did not comply with several notices under Section 59(2) DVAT Act, which called for the submission of certain documents. The Court held that the petitioner should file a statutory appeal under Section 74 of the DVAT Act to challenge these default notices, allowing the petitioner to raise objections regarding their validity and the limitation period for assessment or re-assessment. 3. Entitlement to Refund Along with Interest: The Court directed the respondent to refund Rs. 17,10,15,285/- for the 4th quarter of 2015-16 and Rs. 5,44,39,148/- for the 1st quarter of 2017-18, along with interest as per Section 42 of the DVAT Act. The refund was to be effected within three weeks from the date of the decision. 4. Maintainability of the Writ Petition: The respondent argued that the writ petition was not maintainable due to the availability of an alternate statutory remedy under Section 74 of the DVAT Act. The Court acknowledged this but allowed the writ petition partly, emphasizing that the petitioner could still challenge the impugned default notices through a statutory appeal. Conclusion: The writ petition was partly allowed. The impugned adjustment order was quashed, and the respondent was directed to refund the claimed amounts with interest. The petitioner was given the liberty to challenge the default notices through a statutory appeal. The writ petition and the pending application were disposed of accordingly.
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