9911796707
TMI Blog2009 (9) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT Rules, 2005"). Sri Sanjit Mohanty, learned senior counsel appearing for the petitioner, submitted that the petitioner was assessed for the assessment period April 1, 2005 to March 31, 2006 vide assessment order dated July 10, 2007 (annexure 1), in terms of which the assessing officer came to determine tax and penalty of Rs. 1,21,96,698.12 and after adjusting the said demand against the input tax credit (in short, "ITC") of Rs. 7,81,73,758.09 came to hold that the balance amount of input tax credit of Rs. 6,56,77,059.97 was directed to be carried forward to the next period. The petitioner further submitted that in terms of section 58(4) of the OVAT Act, it was assessed to excess input tax credit for the assessment year 2005-06 and since such input tax credit remained un-adjusted even after a period of twenty four months from the close of the year to which the tax period, for which the return showing the excess input tax credit relates, the petitioner may opt to claim for refund of the amount of such excess credit which remain unadjusted. It is further submitted that in terms of rule 66 of the OVAT Rules, 2005 the petitioner made an application in form VAT 324 to the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 of 2006 decided on May 15, 2008 Reported in [2008] 15 VST 228. Accordingly, the order of assessment was set aside and direction was issued to make reassessment in terms of the observations indicated in the first appellate order. It is only after the disposal of the petitioner's first appeal, vide order dated December 31, 2008, that a show-cause notice under section 57(3) of the OVAT Act, 2004 was issued to the petitioner calling upon the petitioner to show case under annexure 6 (noting therein that since the assessment order for the period 2005-06 (which is the basis of refund application) had been set aside in the first appeal with a direction to the assessing officer to redo the assessment) the application for refund could not be entertained at such stage. Therefore, the petitioner was called upon to show cause as to why its application for refund shall not be rejected under section 57(3) of the OVAT Act, 2004. The petitioner responded to the aforesaid show-cause notice by letter dated February 2, 2009 (annexure 7). The Assistant Commissioner considered the explanation submitted by the petitioner under annexure 7, and came to a conclusion that, since the original as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when dealer exercises "option" in writing for further carry-over. In the present case the petitioner asserts that in terms of rule 66 of the OVAT Rules, 2005 the petitioner had exercised its option not to carry forward the excess input tax credit to any subsequent tax period and had instead sought for refund of the same. Therefore it is asserted that sub-section (2) of section 57 of the OVAT Act has no application to the facts of the present case. In the light of the aforesaid contention, the petitioner asserts that an order under sub-section (3) of section 57 and exercise of such power in rejecting the petitioner's application for refund under annexure 8 was not available, since clearly, the order allowing the petitioner's appeal related to the petitioner's claim for additional input tax credit amounting to Rs. 17,69,021.21 towards tax paid by the petitioner on purchase of furnace oil, grease, adhesive, bitumen paper, cotton waste and spare parts. The learned counsel for the petitioner further submitted that the appeal was limited to the aforesaid aspect and therefore, the order allowing the appeal and directing for reassessment, cannot in law be termed to be an "o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the first appellate authority is concluded. A further plea sought to be advanced by the Revenue in the counter-affidavit is to the effect that, the petitioner is not entitled to refund of excess input tax credit for the year 2005-06 since the excess input tax credit for the said year has been adjusted during the subsequent year, i.e., 2006-07 towards output tax under the OVAT and the CST Act. Sri Patnaik further submitted that section 58 of the OVAT Act provides that if the input tax credit at the end of any year remains unadjusted against the output tax of two subsequent years, then only the assessee has option to claim for refunding of the unadjusted amount. It is asserted that since input tax credit for the year 2005-06 was adjusted during the year 2006-07, no refund under section 58 of the OVAT Act could be claimed. It is further submitted that on a conjoint reading of sections 57 and 58 of the OVAT Act it would be clear that when there is a direction for reassessment, no refund can be granted even under section 58 of the OVAT Act. In this respect learned counsel for the Revenue presented before this court a statement of the returns filed by the petitioner for 2006-07 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y submitted that since during 2006-07 the petitioner also had excess input tax credit available during very same year, no question of seeking adjustment of excess input tax credit was available to the petitioner for the earlier year, i.e., 2005-06 could nor does arise. Further learned counsel submitted that for the assessment year 2006-07 the excess input tax credit determined as noted hereinabove, was also not adjusted in the subsequent two accounting years, i.e., 2007-08 and 2008-09 and consequently thereto the petitioner had sought for refund of the said excess input tax credit under section 58(4) and rule 66 of the OVAT Act and Rules, respectively. Most importantly the said application for refund for the year 2006-07 was allowed vide order dated June 2, 2009 passed by the Joint Commissioner of Sales Tax, Bhubaneswar Range, Bhubaneswar under annexure 10 to the rejoinder affidavit. In terms of the said order while the petitioner had been found to have excess input tax credit at the end of March, 2007 of an amount of Rs. 5,63,34,436.98 after adjusting a demand of Rs. 16,79,945 as due for the assessment year 2006-07 (by virtue of rectification order No. 1730 dated June 2, 2009) ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Comptroller and Auditor General of India, Gian Prakash, New Delhi v. K.S. Jagannathan reported in AIR 1987 SC 537 and in particular para 20 thereof which is extracted hereinbelow: "There is thus no doubt that the High Courts in India exercising their jurisdiction under article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercise the discretion conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a High Court can, in the exercise of its jurisdiction under article 226, issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ume 1, para 89, it is stated that the purpose of an order of mandamus: 'is to remedy defect of justice; and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual.' 20.. There is thus no doubt that the High Courts in India exercising their jurisdiction under article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty or both if any, due from, and payable by, the dealer on the date of such adjustment shall first be deducted from the amount of such refund before adjustment. (3) No claim for refund of any tax, including interest or penalty or both, if any, paid for any tax period or periods under this Act shall be allowed in any case where there is an order for reassessment for such period until such reassessment is completed. Section 58. Refund of tax under special circumstances: . . . (4)(a) Where any excess input tax credit for a tax period is carried forward for adjustment against the tax due for subsequent tax period or periods and such credit or part thereof remains unadjusted even after a period of twenty four months from the close of the year to which the tax period for which the return showing the excess input tax credit relates, the dealer may opt to further carry forward the credit till final adjustment or may claim refund of the amount of such excess credit remaining adjusted. (b) Where a dealer opts for refund under clause (a), he shall make an application to that effect to the assessing authority within such time and in such manner as may be prescribed. (c) Any refund cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Provided further that an application for refund made after the period of one month may be admitted by the assessing authority if he is satisfied that the dealer had sufficient cause for not making the application within the said period." On an analysis of sections 57 and 58 of the OVAT Act, we are of the considered view that both provides for refund. Whereas section 57 is the general clause covering refund, section 58 has been enacted for refund of tax under "special circumstances". A person who seeks to claim for refund of "unadjusted excess input tax credit", is required to make an application signifying his option for the same and in terms of rule 66 such option is to be exercised within a period of one month from the date of expiry of the period of twenty four months from the end of the year to which the tax period relates. In the present case there is no dispute that the refund application relates to the assessment year 2005-06 and the petitioner has made an application for refund under annexure 2 in form VAT 324 on April 29, 2008, i.e., within the period stipulated under the Act and Rules. Clearly the intention of the Legislature in this regard is that once an assessee wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the petitioner's refund application, it is clear that the only reason described in the said order relates to the condition imposed under section 57(3) of the OVAT Act, i.e., since the petitioner had succeeded in his appeal, the matter had been remanded back for reassessment by the assessing officer which was not yet done. In this respect we are in complete agreement with the contention advanced on behalf of the petitioner and do not find any merit on the contention raised by the Revenue. It is absolutely clear from the assessment order 2005-06 that the petitioner had a balance amount of input tax credit of Rs. 6,56,77,059.97 which was directed to be carried forward to the next period. Though an appeal was preferred by the petitioner against the assessment order under annexure 1, the same was limited to the question of disallowance of the claim for additional input tax credit of Rs. 17,69,021.21. The said claim was based on tax paid by the petitioner on account of purchase of goods like furnace oil, grease, adhesive, bitumen paper, etc. The claim of the petitioner was dealt with by the appellate authority and by making various observations in the appellate order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt indicated in column 3 for the subsequent months is seen, in no month during the year 2006-07, has the input tax credit carried forward been less than the brought forward balance amount shown in April, 2006. Therefore on this ground alone it would be clear from the tabular statement itself, that, in fact there has been no adjustment of the excess ITC of the year 2005-06 during the year 2006-07. A further reason as to why we cannot accept the stand of the Revenue on the score is that for the year 2006-07 whereas VAT dues calculated to be Rs. 4,10,69,342 yet, in the assessment order (annexure B) to the counteraffidavit, the assessing officer had determined that in course of the said year, i.e., 2006-07 the petitioner was entitled to input tax credit of Rs. 15,91,03,885.51 and after deducting a sum of Rs. 4,10,69,342 towards VAT and Rs. 5,82,09,363.25 towards CST as well as after adjusting Rs. 34,90,743,28 towards reverse credit it was determined that the petitioner still had a balance amount of ITC for 2007-08 amounting to Rs. 5,63,34,436.98. Therefore, since there was never any short-fall of tax paid/payable during the year 2006-07, no question of adjustment of excess input tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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